Exam FAM – SOA Practice Questions
and Answers 100% Pass
annuity certain - ✔✔(1 - v^n )/ d
Structured Settlement top down vs bottom up - ✔✔Two approaches can be used to
determine the annuity payments in a structured settlement:
Top-down approach: Determine an appropriate lump sum amount, then convert that
amount to an annuity
Bottom-up approach: Determine an appropriate income stream, then calculate the EPV
of the payments
The bottom-up approach is more suitable for structured settlements as their objective is
to match the pre- injury income of the IP.
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,coinsurance on homeowners insurance (Formula) - ✔✔if coinsurance requirement isn't
met (amount that needs to be covered ) then the benefit is = L*(amount
covered/(coinsurance * value at time of loss))
|f the factor applied to loss is greater than 1 then it's just L
If you have a short "death benefit is policy value" whats a trick you can use - ✔✔if you
have premium by equivalence you should know the policy value at beginning and end
so you can use the recursive formula to get two formulas for P
u|t q x means what - ✔✔the u year deferred probability a life aged x dies in time
(u,u+t)
expense policy value - ✔✔EPV(expenses) - EPV(expense loading)
(where expense loading is G-P or just Pe if you need to find that for the solution)
On Level premium when you have rating factors in addition to trend like age and risk
class - ✔✔Base level premium * trend ^ number of years * current rating factors
what to do with censored data in KM or NA estimators of survival - ✔✔Include them in
the risk pool r and then take them out at the value specified (so if it's at least 50 include
it in r but when you get a d>50 it's removed from r and isn't included in the ds)
mean excess loss function - ✔✔e(d)= E[X-d | X>d] = (E[X] -E[X^d])/(1-F(d))
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, What is covered by marine insurance - ✔✔The following risks are eligible for coverage
under inland marine insurance:
Domestic shipments made by railroad, motor vehicle, or ship on inland waterways.
Provision is made for insuring goods transported by air, mail, parcel post, express,
armored car, or messenger.
Instrumentalities of transportation and communication, such as bridges, tunnels, piers,
wharves, docks, communication equipment, and movable property.
Personal property floater risks used for coverage of construction equipment, personal
jewelry and furs, agricultural equipment, and animals.
PV of whole life with constant interest and force of mortality - ✔✔integral from 0 to
infinity of mu*e^-(mu+delta)
Reserves are added to what when determining ultimate losses and why - ✔✔Reserves
are added to paid losses (not incurred) since we are trying to estimate the ultimate paid
amounts. IBNP amounts are included in the reserve so we would be double counting
them.
What makes risk insurable? (how many) - ✔✔6
Economically Feasible
Economic Value is calcuable
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and Answers 100% Pass
annuity certain - ✔✔(1 - v^n )/ d
Structured Settlement top down vs bottom up - ✔✔Two approaches can be used to
determine the annuity payments in a structured settlement:
Top-down approach: Determine an appropriate lump sum amount, then convert that
amount to an annuity
Bottom-up approach: Determine an appropriate income stream, then calculate the EPV
of the payments
The bottom-up approach is more suitable for structured settlements as their objective is
to match the pre- injury income of the IP.
100% Pass Guarantee Katelyn Whitman All Rights Reserved © 2025 1
,coinsurance on homeowners insurance (Formula) - ✔✔if coinsurance requirement isn't
met (amount that needs to be covered ) then the benefit is = L*(amount
covered/(coinsurance * value at time of loss))
|f the factor applied to loss is greater than 1 then it's just L
If you have a short "death benefit is policy value" whats a trick you can use - ✔✔if you
have premium by equivalence you should know the policy value at beginning and end
so you can use the recursive formula to get two formulas for P
u|t q x means what - ✔✔the u year deferred probability a life aged x dies in time
(u,u+t)
expense policy value - ✔✔EPV(expenses) - EPV(expense loading)
(where expense loading is G-P or just Pe if you need to find that for the solution)
On Level premium when you have rating factors in addition to trend like age and risk
class - ✔✔Base level premium * trend ^ number of years * current rating factors
what to do with censored data in KM or NA estimators of survival - ✔✔Include them in
the risk pool r and then take them out at the value specified (so if it's at least 50 include
it in r but when you get a d>50 it's removed from r and isn't included in the ds)
mean excess loss function - ✔✔e(d)= E[X-d | X>d] = (E[X] -E[X^d])/(1-F(d))
100% Pass Guarantee Katelyn Whitman All Rights Reserved © 2025 2
, What is covered by marine insurance - ✔✔The following risks are eligible for coverage
under inland marine insurance:
Domestic shipments made by railroad, motor vehicle, or ship on inland waterways.
Provision is made for insuring goods transported by air, mail, parcel post, express,
armored car, or messenger.
Instrumentalities of transportation and communication, such as bridges, tunnels, piers,
wharves, docks, communication equipment, and movable property.
Personal property floater risks used for coverage of construction equipment, personal
jewelry and furs, agricultural equipment, and animals.
PV of whole life with constant interest and force of mortality - ✔✔integral from 0 to
infinity of mu*e^-(mu+delta)
Reserves are added to what when determining ultimate losses and why - ✔✔Reserves
are added to paid losses (not incurred) since we are trying to estimate the ultimate paid
amounts. IBNP amounts are included in the reserve so we would be double counting
them.
What makes risk insurable? (how many) - ✔✔6
Economically Feasible
Economic Value is calcuable
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