A select life aged 40 purchases a 10-year endowment insurance with $100,000 sum insured. Premiums are payable annually in advance and death benefits are payable at the end of the year of death. Assume that (i) commission is 10% of the first premium and 5% of each subsequent premium, (ii) other expenses are $100 at issue, and $10 at each subsequent premium date, (iii) mortality follows the Standard Select Life Table, and (iv) interest is 5% per year. Calculate the annual premium.

A select life aged 40 purchases a 10-year endowment insurance with $100,000 sum insured. Premiums are payable annually in advance and death benefits are payable at the end of the year of death. Assume that (i) commission is 10% of the first premium and 5% of each subsequent premium, (ii) other expenses are $100 at issue, and $10 at each subsequent premium date, (iii) mortality follows the Standard Select Life Table, and (iv) interest is 5% per year. Calculate the annual premium.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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