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Rating factor

\ˈreɪtɪŋ\ \ˈfæktər\

A rating factor is a characteristic that could potentially be used to identify different mortality rates between individuals.

The differentiation between individuals with different characteristics (i.e, different values of rating factors) will increase the extent to which assumed mortality rates and survival curves can be tailored for a particular pension plan.

When modeling longevity, rating factors can generally be treated either as covariates (factors that can be varied simultaneously with other factors) or as stratifiers (factors that are used to segment populations in order to model different groups separately).

An example of the use of covariates in longevity modeling is the use of pension bands, occupation and geo-location (ZIP codes, postal codes or post codes depending on location) in the VitaCurves models.

Examples of the use of stratifiers are:

  • The blue- and white-collar tables developed as part of the Society of Actuaries PRI 2012 study.
  • The development of separate tables for 1st lives and 2nd lives (annuitants and their beneficiaries) in the VitaCurves models.
  • The differentiation between male and female tables in most analyses.

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