the solution in the sample 4 shows that PV Factor = Incr paid * (1+DR)^-timing, while in the Excel illustration: PV Factor = incr paid *(1+DR)^-(timing - (0.5 - AAD effective year)).
The excel file indicates it is the formulas for LIC , not LRC - i believe both column 7, 9 is for LIC, this is discounting for Loss Component, unless I am missing sth else?
thanks so much! I understand now, so basically there are 3 types of PV factors, PV for LIC, PV for LC (part of LRC), and PV for prem (part of LRC)? Am i understanding correctly?
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One is the PV factor for the LIC and the other is for the PV factor of the LRC
The excel file indicates it is the formulas for LIC , not LRC - i believe both column 7, 9 is for LIC, this is discounting for Loss Component, unless I am missing sth else?
The title says discounting for Loss Component which is part of the LRC
thanks so much! I understand now, so basically there are 3 types of PV factors, PV for LIC, PV for LC (part of LRC), and PV for prem (part of LRC)? Am i understanding correctly?
Yes, you can think of it that way
I think its more important to understand why those factors are different for each though