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ABy Admin
Jan 19'24
Exercise
For a fully discrete whole life insurance policy of 50,000 on (35), with premiums payable for a maximum of 10 years, you are given:
(i) Expenses of 100 are payable at the end of each year including the year of death
(ii) Mortality follows the Standard Ultimate Life Table
(iii) [math]i=0.05[/math]
Calculate the annual gross premium using the equivalence principle.
- 790
- 800
- 810
- 820
- 830
Copyright 2024. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.
ABy Admin
Jan 19'24
Answer: D
By the equivalence principle, we have
[[math]]
G \ddot{a}_{35: \overline{10}}=50,000 A_{35}+100 a_{35}+100 A_{35}
[[/math]]
so
[math]G=\frac{50,100 A_{35}+100\left(\ddot{a}_{35}-1\right)}{\ddot{a}_{35: 10}}=\frac{50,100(0.09653)+100(17.9728)}{8.0926}=819.69[/math]
Copyright 2024. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.