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Resource page for ST345: Life Contingencies

Information on Examinable Material from lectures impacted by Term 2 Strike Action

Term 3 Lectures

All content of the CT5 Core Reading, as provided by the Institute and Faculty of Actuaries, is examinable. The 2018 final ST345 exam has been approved by the Institute and Faculty of Actuaries as suitable to contribute towards an actuarial exemption. The exam was set before the strike action took place; further lectures in term 3 will address the sections of the Core Reading not yet covered.

Resources:

SSLC Feedback:

Class Tests:

  • Class Test 1: The first class test will assess material covered up until Week 4 (Part 1) below (roughly Week 4 Lecture 1), and will be held during Week 5 Lecture 3. The class test will ask "Typical Exam Questions" (see below for examples) totaling 20 marks, will last 45 minutes, and is worth 15% of your overall module mark. Immediately following Week 4 (Part 1) we will start discussing "Reserving" which will contextualise a number of parts of the core reading we have broadly covered (below), however this will not be assessed in the Class Test 1. Class Test 1 will assess the material covered in the following sections of the Core Reading:
    • Unit 1, Simple Assurances and Annuities: All except Section 9.
    • Unit 2, The Evaluation of Assurances and Annuities: All.
    • Unit 3, Net Premiums and Reserves: Sections 1 -> 4.
    • Unit 4, Variable Benefits and Annuities: All except Unitised With Profits.
    • Unit 5, Gross Premiums and Reserves for Fixd and Variable Benefit Contracts: Sections 1-> 5.
    • Unit 10, Factors Affecting Mortality and Seclection and Standardisation: Sections 1 -> 5.
  • Class Test 1 Feedback:
    • Individual Results
    • 2017/18 Class Test 1 and Model Solutions
    • Remarks:
      • General Remarks:
        • I was (personally) really pleased with the class performance - clearly everyone has worked very hard . Everyone got a mark at 2:1 level or above, which is the level I would expect the exemption to be set at. “Contingent” on everyone maintaining this standard to the final exam (which will be of the same ‘level’) then this is good news.
        • The class test and solutions can be found here. Individual marks can be found here.
        • The time / marks / difficulty trade-off in the class test is broadly representative of actuarial exams. As you will now have noticed: practice, time management, being able in this case to use the tables, and being able to quickly recall facts are all critical. Having strategies in place to prepare for exams and use the time in exams is a good idea for actuarial subjects.
        • Try to think of concise examples - it helps to read (from an actuarial perspective) financial media.
        • Be careful looking up tables. On marking I was generous if the right number was transcribed from the book incorrectly, but harsher if the wrong number was. Whether the IFOA follow the same practice in marking the exams you will sit in the future is unclear.
        • Actuarial exams broadly ask questions from the entire syllabus to ensure you have covered everything. You may wish to take this into consideration, noting where the questions covered in the class test appear in the syllabus, in preparation for the final exam…
      • Some Specific Remarks:
        • Q1a) - Many of you were far too verbose. It is typical in actuarial exams for these types of wordy questions to be at the start of exams, but you may run into time issues if you attempt them first and can’t be concise. A strategy may be to complete them once you’ve done all of the “crank-the-handle” calculations in the remainder of the paper - but at the very least have a strategy! Lots of people used “Adverse Selection + Smoking” for the Self-Selection question - I permitted this (particularly as I used it as a historic example in class), but it’s really a very poor example: all life assurances policies sold now-adays would select for this. Here’s a better example:
          • Some individuals (like myself) have paid for a genetic profiling (see 23andme - I can send you a discount code!) to determine whether they are at higher risk of debilitating conditions such as Alzheimers. Life Offices don’t (and are not allowed to in the UK) to select on genetic information, but individuals (or me) could use this additional information for a personal advantage. For instance, I could take out "Long Term Care Insurance” if I knew I was likely to need care in my old age...
        • Q1b) - The ordering of the select death rates was the reverse to that which we typically see in temporary initial selection. You would need to have had an example indicating higher expected mortality for the select groups.
        • Q2 - Generally well done, modulo occasional table look up errors...
        • Q3 - Again, generally well done. Key mistakes were 55+45 = 100, not 90 (!). I set the question at 6% interest and not 4% interest deliberately, to encourage you not to use the commutation functions available at 4% interest.
        • Q4 - Part 1 (EPV) was very well done. Part 2 (Variance) wasn’t. Lots of people clearly rushed the table look-ups at the end of the test having run out of time, and had a number of very silly transcribing errors (see my advice for Q1a)). Recall expectations are taken with respect to mortality, not interest and mortality => the second moment should either be using an altered interest rate (for the entire calculation), or the discounting needs doubling in the period.
  • Class Test 2: The second class test will assess material up until Week 9 below, and will be held during Week 10 Lecture 3. The class test will ask "Typical Exam Questions" totaling 20 marks, will last 45 minutes, and is worth 15% of your overall module mark.
  • Class Test 2 Feedback:

    Lectures:

    • *NOTE: This is a reading course - the core reading (above) is entirely examinable, the lectures are merely helping you to read (in a pedagogical fashion) the core reading. The class tests and final exam will be comprised of questions similar in style to those of the IFOA (above)*
    • NB: UX/Y.Z - denotes Unit X of the CT5 Core Notes, Section Y.Z - You are expected to go away and read this!
    • NB: QY/M/ZZ - denotes a past IFOA exam, Year Y Month M, Question Z - you need to be well practised!
    • Week 1 Lecture Notes . Covered (in order) U1/1.1-1.3, U2/1-3, U10/1-5, U2/6.
    • Week 1 Errata: See Below ***Week 1 - Week 5 Notes, including (spotted) errata***
    • Week 1 (Illustrative) Example: Not great, again (The Economist, 4/1/18).
    • Week 1 Typical Exam Questions: For instance, Q2015/4/2, Q2015/4/4a)-b), Q2015/4/7, Q2015/4/8, Q2015/10/1a)-1b), Q2015/10/2, Q2015/10/4, Q2016/4/1, Q2016/4/3a), Q2016/10/4a), Q2016/10/6.
    • Week 2 Lecture Notes. Covered (in order) U10/1-5 (remainder), U1/1.6, (The beginnings of) U3/5
    • Week 2 Errata: See Below ***Week 1 - Week 5 Notes, including (spotted) errata***
    • Week 2 (Illustrative) Example 1: Life Insurance Calculator (see covariates!).
    • Week 2 (Illustrative) Example 2: Zurich Life Insurance Policy.
    • Week 2 Typical Exam Questions: For instance, Q2015/4/1, Q2015/4/6, Q2015/4/9i), Q2015/4/13i), Q2015/10/3, Q2016/4/3c), Q2016/4/5, Q2016/4/10, Q2016/10/1, Q2016/10/5.
    • Week 3 Lecture Notes. Covered (in order) U1/6.4, U4/1-3, U1/7-8
    • Week 3 Errata: See Below ***Week 1 - Week 5 Notes, including (spotted) errata***
    • Week 3 (Illustrative) Example 1: Insurers penalising people with depression (The Guardian, 19/1/18).
    • Week 3 (Illustrative) Example 2: Staying Alive. Demography in Japan (The Economist, 11/1/18).
    • Week 3 Typical Exam Questions: For instance, Q2015/4/4c), Q2015/4/10i)-ii), Q2015/10/1c, Q2015/10/5, Q2015/10/8, Q2016/4/3b), Q2016/4/6, Q2016/10/4b)
    • Week 4 (Part 1) Lecture Notes. Covered: U4/5
    • Week 4 (Part 1) Errata: See Below ***Week 1 - Week 5 Notes, including (spotted) errata***
    • Week 4 (Part 1) (Illustrative) Example: The Equitable Life Assurance Society / BBC Timeline
    • Week 4 (Part 1) Typical Exam Questions: For instance, Q2015/4/12, Q2016/4/12i), Q2016/10/9
    • Week 4 (Part 2) + Week 5 Lecture Notes . Covered "Reserving" from U1-5 (in particular [U1/9, U3/5 + U5/5]). Note that we only briefly covered the key concepts, you ought to familiarise yourself with the detail as presented in the Core Notes.
    • Week 4 (Part 2) + Week 5 Errata: See Below ***Week 1 - Week 5 Notes, including (spotted) errata***
    • Week 4 (Part 2) + Week 5 (Illustrative Example): A Big Hole (The Economist. 20/1/18).
    • Week 4 (Part 2) + Week 5 Typical Exam Questions: For instance, Q2015/4/9ii), Q2015/4/13, Q2016/4/2, Q2016/4/12, Q2016/4/13, Q2016/10/12. Note that Reserving appears extensively in questions primarily assessing later material.
    • Week 5 Homework: Please review U3/8 onwards. This is not (at all) covered in class, but is examinable.
    • ***Week 1 - Week 5 Notes, including (spotted) errata***

    Murray's Lecture One "Expectation Setting":

    The pace we encounter new material and concepts in ST345 will be (necessarily) a particular challenge. I would positively welcome any interruptions to tell me to slow down, or ask me to cover particular topics in more detail. I would really appreciate direct feedback in the lecture. As far as providing comprehensive typeset lecture notes in advance, this isn’t (by the nature of this course) possible. A fuller reasoning for this is as follows:

    • The lecture material I’m presenting (and in particular anything contextual such as the Economist in week 1, or the Zurich insurance policy in week 2) is not examinable. However, the core reading is entirely examinable. The lectures are merely helping students in the class to read (in a pedagogical fashion), understand, and contextualise the core reading. The syllabus of the core reading is considerable for a single 15 CAT module with 30 hours of contact time, and the core reading itself is difficult to read directly without knowing the material in advance - it’s poorly organised and explained with little contextual detail.
    • To emphasise this point please consider how this material is covered at other comparable universities:
      • The University of Kent offers an exemption from CT5 covering the material over the course of module MA516 (48 hours of lecture and exercise classes) AND MA533 (another 36 hours of lecture and exercise classes) for a total of 84 hours of contact time. This is for a specialist actuarial degree, in which the students will also have encountered significant prior contextual material to frame Life Contingencies - something we have to cover in addition in ST345.
      • Heriot-Watt University offers an exemption from CT5 covering the material over the module F70LA (around 40 hours of lecture and exercise classes) and module F70LB (around another 40 hours of lecture and exercise classes) for a total of 80 hours of contact time. This is within the third year of a specialist actuarial degree, taught by senior practising actuaries, in which (again) the students will also have encountered significant prior contextual material.
    • In summary we are trying to fit in roughly 2-3x the material that would typically be encountered in a well-paced and comprehensive lectured module. Ultimately this considerable workload (both for the students, and us as a department) is with the intent that we want to be able to offer students enrolled the possibility of an exemption from CT5 (or at the very least coverage of the material should our application to the IFOA be declined). To offer this exemption we are entirely constrained by the IFOA - we have to cover the core reading, and set an exam of a standard, and examining the same syllabus, as would be required for a student independently studying CT5. This is particularly the case as it’s the first time it has been lectured. I would caution anyone from taking this module (due to the workload and intellectual nature / depth of the material) unless they are seriously considering an actuarial career and feel a need to get an exemption from CT5.
    • This issue is further compounded by the fact that the University of Warwick has not previously offered a module or exemption for Life Contingencies, and so there is no pre-existing “lecture material” or body of material from which we can draw (we are literally writing it from scratch). Furthermore, the IFOA syllabus is being re-designed / re-structured, and so it’s unclear if this syllabus will exist in it’s present form. As such, we do not have extensive typeset notes, and it would be unreasonable / unwise to expend the considerable effort required to produce them.
    • Taking into account the volume of material, constraints by IFOA, and the short duration / life-span of this module it is entirely unrealistic to lecture this in a form which student will typically encounter in other modules. We will not cover all of the material, and all we can realistically do is help students to read (in a pedagogical fashion), understand, and contextualise the core reading in preparation for the exam. The class tests and final exam will be comprised of questions (very) similar in style to those of the IFOA, and I’ve been giving specific exam-style questions (in fact exam questions) where appropriate for this stage in the course (and will continue to do so).
    • As such, this is a reading course - there is a fixed body of material, and the particular aspects we cover in the lectures is flexible and informed by a combination of me trying to cover as broadly (and sensibly) the material as possible, while being informed by the aspects of the course the class as a whole are finding difficult. I’m perfectly willing to adapt and spend more time on specific topics, but this comes with the caveat that I will not cover something else (perhaps not at all!). This means I’m not entirely sure what will be covered in each of the thirty lectures (although see below)! As an example of this on 15/1/18 I got considerable consternation from the audience when I described Term Assurances in terms of sequenced Whole Life Assurances - I then went back in the second lecture on 15/1/18 and over the course of 10 minutes provided more detail (on material which is (somewhere else) in the core reading). Note that I’m trying to adapt to the audience, and attempting to give specific referencing back to the core material wherever possible.
    • Students should not feel the need to religiously copy down my lecture notes - the core reading is the examinable body of material, and I will at the end of a given week put a copy of my presented material online along, with referencing to the core material, and with a listing of exam style questions. Students should try and concentrate and follow my prepared lecture with this in mind - as a (hopefully) useful aid in preparing for the exam. If individuals find the material easier to read directly from the core notes, then they may not find the lectures directly useful, and I won’t take offence if individuals prioritise the considerable time they need to expend on this by instead themselves self-studying. Indeed, this time prioritisation is very good practise for aspiring actuaries who will have a large number of further exams of this type over the next few years.
    • Going back to my initial comment: I welcome in-lecture interruptions to tell me to slow down, or ask me to cover particular topics in more detail. I would really appreciate direct feedback in the lecture. I realise my use of the visualiser and whiteboard could probably be improved - again, I’d appreciate interruption if my presentation itself is causing difficulty.
    • Note that both me and Ewart (cc’d) have office hours - students are entirely welcome to drop by during those times to discuss the material contained in ST345 (details on webpage). The precise division of lecturing between me and Ewart is not (for external reasons) entirely clear, but roughly I will lecture the first half, and will ‘sit-in’ for parts of the second half (with Ewart doing the opposite).
    • Broadly speaking I’m sticking to the following syllabus coverage plan (although it’s a plan and subject to alteration) which contextually seems sensible to me. Note each of these sections doesn’t have the same volume of material, and doesn’t have a one-to-one mapping with the underlying core reading. Some sections could be more or less readily ‘dropped’ to make way for material I believe ought to be prioritised:
      • Survival Models
      • Life Tables
      • Simple Assurances / Annuities
      • Premiums, Expenses and Profit
      • Variable Assurances / Annuities
      • Frequency of Assurances / Annuities
      • With Profits Policies
      • Reserving
      • Policy Alteration
      • Joint Lives (as per single life)
      • Multiple Decrement Models (including Disability and Sickness)
      • Pension Fund Mathematics
      • Unit Linked Contracts
      • Profit Testing