Actuarium

SOA ILA LPMIndividual Life & Annuities β€” Life Product Management

Fellowship (FSA)
5 hoursΒ·β‰ˆ10–12 written-answer questionsΒ·β‰ˆ400 study hours

Syllabus learning objectives

Official syllabus

Paraphrased from the SOA syllabus so the study-plan builder and practice sets track the topics you will actually be examined on. Weights are the official topic ranges.

Product design & pricing (term, UL, IUL, VA, FIA)

35%
  • Describe the design features, target markets and risk profiles of term, whole life, universal life, indexed UL, variable and fixed indexed annuities.
  • Set pricing assumptions (mortality, lapse, expense, interest, policyholder behaviour) and justify margins.
  • Evaluate profitability using profit margin, IRR, breakeven year and embedded value measures.
  • Assess the interaction of guarantees, crediting strategies and hedging costs in indexed and variable products.

Experience studies & assumption setting

25%
  • Design a mortality or lapse experience study, choosing exposure method and study period.
  • Apply credibility (limited fluctuation, BΓΌhlmann) to blend company experience with an industry table.
  • Develop dynamic lapse and premium-persistency assumptions as functions of moneyness or crediting rate.
  • Document assumption governance consistent with ASOP 25 and ASOP 52.

Underwriting, reinsurance & distribution

20%
  • Compare fully underwritten, simplified-issue and accelerated underwriting programmes and their mortality slippage.
  • Evaluate YRT versus coinsurance reinsurance for a new product, including capital and profit-sharing effects.
  • Assess distribution channel economics: commission patterns, chargebacks and persistency.
  • Describe the product filing and illustration regulation environment (e.g., AG 49-A for IUL).

In-force management & policyholder behaviour

20%
  • Analyse in-force block profitability and identify management actions (COI increases, crediting changes, buyouts).
  • Evaluate the legal, regulatory and reputational constraints on non-guaranteed element changes.
  • Model policyholder behaviour under stress (mass lapse, anti-selective withdrawals).
  • Quantify the value of in-force management levers under multiple economic scenarios.

Lecture videos for this exam

Open the full video library β†’

Machine Learning to Predict Underwriting Decisions for Life and Health Insurance – ICA2023

Actuaries Institute Β· Machine Learning in Actuarial Work

Overview

LPM is the ILA track's product exam: how life and annuity products are designed, priced, underwritten, reinsured and managed after issue. Expect case-study driven questions that ask you to recommend and defend.

Duration
5 hours
Questions
β‰ˆ10–12 written-answer questions
Style
Computer-based written answer with case study
Credit
ILA track FSA requirement
Passing
β‰ˆ 60–65% of points (varies by sitting)

Syllabus map

Product design & pricing (term, UL, IUL, VA, FIA)
35%
Life Contingencies PrimerInterest Theory and Time Value of Money
Experience studies & assumption setting
25%
Credibility Theory: Limited Fluctuation, BΓΌhlmann, and BayesLife Contingencies Primer
Underwriting, reinsurance & distribution
20%
Reinsurance Structures and Pricing
In-force management & policyholder behaviour
20%
Forecasting Premium, Loss, and Profitability

Key formulas

Profit margin β€…β€ŠPM=βˆ‘tvt Profittβˆ‘tvt Premiumt\;PM=\dfrac{\sum_t v^t\,\text{Profit}_t}{\sum_t v^t\,\text{Premium}_t}

IRR solves βˆ‘tProfitt (1+IRR)βˆ’t=0\sum_t \text{Profit}_t\,(1+IRR)^{-t}=0

Limited-fluctuation credibility (deaths) β€…β€Šnfull=(zΞ±/2k)2,Z=min⁑ ⁣(1,d/nfull)\;n_{full}=\left(\dfrac{z_{\alpha/2}}{k}\right)^2,\quad Z=\min\!\left(1,\sqrt{d/n_{full}}\right)

Dynamic lapse β€…β€ŠΞ»=Ξ»baseβ‹…min⁑ ⁣(U,max⁑(L, 1+m (rmktβˆ’rcred)))\;\lambda=\lambda_{base}\cdot\min\!\big(U,\max(L,\,1+m\,(r_{mkt}-r_{cred})\big)\big)

Coinsurance profit share β€…β€ŠRefund=max⁑(0, ρ (Preβˆ’Creβˆ’Ere))\;\text{Refund}=\max\big(0,\,\rho\,(P_{re}-C_{re}-E_{re})\big)

Study strategy

  1. Answer in the SOA style: label parts, give the recommendation first, then justify with two or three quantified reasons.

  2. Know both sides of every product trade-off (e.g., IUL cap vs. participation rate) β€” questions ask you to critique a design.

  3. Practise reading a case study quickly; 30% of points typically depend on it.

Common traps

  • Confusing profit margin (PV profits / PV premiums) with return on capital.

  • Ignoring the reinsurer's right to raise YRT rates when comparing reinsurance forms.

  • Recommending a COI increase without addressing the contractual basis and litigation risk.

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