#19
Hi, the problem states that E[X; 100k] = 12310, ILF(100K) = 0.667 and 250K is the basic limit. Therefore, is it correct to to divide 12310 by ILFs of 0.667 to arrive at E[x; 250k] = 18465? and similarly, E[X; 1M] can be calculated via 18465 x 1.267 which is 23389.
Comments
Your logic is correct but your terminology is a little off. The problem states $100k is the basic limit. However, we're given ILFs that have been rebased at a 250K policy limit. This could be because 250k is a more common policy limit for policyholders to select and/or that the insurer wants to offer a discount for selecting a lower limit.