## MLC: How to solve it study guide

Why Guo's MLC study guide is unique. Each chapter of my study guide addresses some real pain points most exam candidates have.

### Spring 2018 edition

You should be able to order my spring 2018 MLC study guide from Actuarial Bookstore or Actex starting Monday October 30, 2017.

Spring 2018 MLC: How To Solve It sample chapters

### Fall 2017 edition errata

These are the most errors found as of 01/17/2021.

Please report any errors to yufeng.guo.actuary@gmail.com

Fall 2017 MLC: How To Solve It sample chapters

#### Serious Errors

Numerous typos were found. Most typos should be obvious and will not be reported here. Only serious errors are reported here.

• About UDD and f(t). In several places in the book, I said that under UDD between integer ages, f(t) is uniformly distributed over [0,1], which would imply that f(t)=1. This statement isn't correct. The correct statement should be that under UDD, f(t_x)=q_x over (0,1), f(t_(x+1))=q_{x+1} over (1,2), and f(t_(x+2))=q_{x+2} over (2,3), and so on. The most important constant is f(t_x)=q_x over (0,1).
• Homework 9.5.14. q_x= 0.0300 should be q_{60}= 0.0300.
• Homework 9.5.15. q_{85}= 0.142857 should be q_{85}= 0.4.q_{86}= 1/6 should be q_{86}= 2/3=0.666667. The final answer e circle 85 for 2 years should be 1.2, not 1.71.
• Example 38.0.1. Y is an increasing, though not monotonically increasing, function of T50 + 1. Should be: Y is an increasing, though not a strictly increasing, function of T50 + 1.
• Example 66.0.7. The premium should be 1,200, not 926. Under UDD, L75 should be -10,397.32, not -6,092.59. Under CF, L75 should be -10,392.82, not -6,088.27
• Section 68.2 PUC, TUC, AL, NC (or Section 1.2 PUC, TUC, AL, NC in Small and Mighty - Pension), the book states: "PUC ( traditional unit credit method). This is the easier method of the two conceptually and it agrees to our intuition. Should be PUC (projected unit credit method).
• Chapter 69 (Or Small and Mighty - pension Chapter 2) Rate of salary, salary scale, and salary. The solution numbering doesn't match the homework numbering. For example, for Homework 69.3.2, the solution number is Solution 69.3.2; the correct numbering should be Homework Solution 69.3.2. There are several no-match errors. There are errors in my LaTex code. This will be fixed in the spring 2018 edition.
• Chapter 69 Homework 69.3.12 (Or Small and Mighty - pension Chapter 2 Homework 2.3.12) Rate of salary, salary scale, and salary. Mid-year approximation. B65=0.02*30,000*(1.04^0.5 - 1.04^40.5)/(1-1.04)= 55,319.8. The correct result should be 58,144.44, not 55,319.8. In addition, the sentence "Mid-year approximation. We used the mid-year salary rate as the average salary rare for the year ..." should be "Mid-year approximation. We used the mid-year salary rate as the average salary rate for the year.

#### Other questions

• How to specify the loss-at-issue random variable for a limited pay policy.

ANSWER. For example, the loss-at-issue for a 10-pay whole life insurance of b on (x) is L=b*v^(Tx+1)-G* PV of m year annuity due, where m=min(Kx+1,10) and G is the gross premium. The PV of the benefit random variable is b*v^(Tx+1), which is not affected by the max number of premiums. Only the PV of the premium is impacted by the maximum number of premiums. The PV of the premiums is G* adue min(Kx+1,10).

• In Example 68.4.2 (or Small and Mighty - Pension Example 1.4.2) Part (b), why S64=42,400 * 1.05^24 instead of S64=42,000 * 1.05^25? In other words, why not use the salary during the year before the valuation date to project the final salary?

ANSWER. As a rule of thumb, when projecting the final salary under PUC, you'll want to use the most current salary data. In this problem, the salary during the year after the valuation date is most current.

#### Study Schedule

Some people asked me how to set up a study schedule for the fall 2017 exam. My answer: you can study at whatever pace you like. However, you'll want to set aside roughly 1 month before the fall 2017 exam date to practice the post 2014 MLC exam papers. The fall 2017 MLC exam date is October 27, 2017. So roughly from September 27 to October 26, you'll want to have a dry run of the officially released post-2014 MLC exam papers under the exam like condition. Before you walk into the exam room on October 27, you should be able to reproduce the solutions to all the post-2014 exam papers pretty much error free.

This really means that your learning of the MLC fundamentals should roughly end around September 27. After Septembers 27, your focus should be to master the post 2014 exam papers. It may take you multiple draw runs of the post-2014 papers for you to reach the exam ready state where you can solve the post-2014 exam papers without thinking nearly error free.

From now till the exam date, you'll want to use a notepad or index cards to keep track your habitual calculation errors. Virtually everyone has some blind spots. For example, my habitual math error was that 5 times 0.24=1. I will write down this common error of mine in a notepad as a reminder to help avoid this math error next time. It's often hard to discover your own faulty math thinking unless you have solved a lot of problems. If you don't track your habitual errors before the exam, trust me, you'll most likely make such errors in the exam. Some times you know the concept inside out yet you just couldn't reproduce the correct answer. Chances are that your brain has hidden math errors. You'll need to expose most of your hidden errors before walking into the exam room.

Of course, the 1 month is the just a rule of thumb. It varies by person. However, make sure you set aside enough dry run time.

Can you possibly cut some corners because your study time is limited? You can probably skip how to derive Thiele's differential equation, the profit testing under a multiple state model, and profit testing under reversionary bonus. These problems are too time-consuming and harder to be tested in the exam.

Small and Mighty: Pension sample

Small and Mighty: Policy Value sample

Small and Mighty: Percentile sample