2017 Spring 19
For TAC formula, do we assume "Tabular discount in reserves" to be "Tabular discount in medical reserves"?
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For TAC formula, do we assume "Tabular discount in reserves" to be "Tabular discount in medical reserves"?
Comments
Yes, it seems the solution in the examiner's report made the assumption that the tabular discount was for medical reserves.
From your question, I assume you realized that if it was for indemnity then you would not subtract that amount from policyholder's surplus to get TAC (Total Adjusted Capital).
If you get a question like this on your exam and the question doesn't specify whether the tabular discount is medical or indemnity, then be sure to state your assumption.
That is a good point. Thanks!!