For a fully discrete whole life insurance of 100,000 on (60), you are given:
i) Reserves are determined using a modified net premium reserve method
ii) The modified net premium reserve at the end of year 2 is 0
iii) Valuation premiums in years 3 and later are level
iv) Mortality follows the Standard Ultimate Life Table v) [math]i=0.05[/math]
Calculate the valuation premium for year 5 .
Copyright 2024. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.
Answer: D
The modified net premium reserve at duration 2 is: [math]{ }_{2} V^{\mathrm{mod}}=100000 A_{62}-P^{\bmod } \ddot{a}_{62}[/math]
[math]P^{\mathrm{mod}}=100000 \frac{A_{62}}{\ddot{a}_{62}}=100000\left(\frac{0.31495}{14.3861}\right)=2189[/math]
Copyright 2024. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.