Multi-status insurance contracts cannot be completely modelled with traditional actuarial techniques. Improved analysis of the stochastic nature of these contracts will allow insurers to more aggressively price and market such products for the benefit of both the insured and the policyholder. This project will develop and analyze the formulas for the mean and variance of discounted cash flows arising from multi-status insurance contracts such as long term care(LTC) insurance. Where practical, the project will produce computer software to evaluate these moment formulas. Where such formulas are impractical, the project will present guidelines for the simulation of these moments. LTC insurance will provide numerical examples of the calculation techniques. Results will be submitted for publication in appropriate insurance and actuarial journals.
