Meaning of area in % earned vs time plots

mardi 10 février 2015

(Longtime lurker, first time poster)



What does an area/integral mean in the context of a % earned vs time plot (i.e., what you draw for the parallelogram method)? This sounds like a stupid question :duh:. However, I realized I couldn't explain it well, even when I can do almost any on-leveling problem.



E.g., consider 2 policies written on 7/1:



Pol 1: 12 mo term

CY WE: 1

CY EE: 1/2

CY Area: 1/8



Pol 2: 6 mo term

CY WE: 1/2

CY EE: 1/2

CY Area: 1/4



If you go by units, then an area is in % earned-years, but it doesn't tell you much.



How do you start with individual % earned vs time plots and combine them to get the partitioned plots you need for the parallelogram method? Am I missing something?



I'm making this more difficult than necessary, I know, but I'm curious how best to describe something so simple as % earned/time plots.





Meaning of area in % earned vs time plots

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