Discuss the macroeconomic policy options for government intervention

What is spillover.

What are the two types of general equilibrium analysis.

(8 points) You are an actuary for Beluga Health which specializes in providing insurance coverage to physicians. Currently, you insure a block of 10,000 long term disability (LTD) policies for 45-year-old male physicians. All policies have a six month elimination period and the following definition of disability: 24 month own occupation followed by any occupation to age 65. (a) (1 point) (i) Define the any occupation definition of disability. (ii) Define the own occupation definition of disability, (iii) Explain how and why insurers use these definitions in combination in a policy. (b) (3 points) Define each of the following LTD benefit provisions and assess how each incents a change in claimants' behavior; (i) Elimination period (ii) Benefit period (iii) Benefit amounts (iv) Offsets for other sources of income (v) Pre-existing condition exclusion You have been given the following pricing assumptions for this coverage: Lapse rates: Year 1: 35% Year 2: 20% of policies persisting from year 1 Year 3: 10% of policies persisting from year 2 Year 4 +: 0% of policies persisting from year 3 Once a member becomes disabled they do not lapse. Disability rates (assume disabilities occur at the beginning of the year ): Age 45: 0.5% Age 46: 0.6% Age 47: 0.7%Probability of someone disabled meeting the any occupation definition of disability: 38% Probability of remaining disabled for greater than 12 months, given originally disabled: 84% Probability of remaining disabled for greater than 24 months, given originally disabled: 70% Average annual salary: $200,000 Annual salary inflation: 0% Interest rate: 0% Benefit replacement ratio: 60% Disability claims are paid out annually based on the claimants status at the end of the year. (c) (4 points) Calculate the expected claim payments for each of the first three years since disability. Show your work