A ten-year term insurance is be issued to a life aged 50. The sum insured is $200,000 and payable immediately upon death. Premium payments are annual in advance. a) Using the SOA Standard Ultimate Life Table at i = 5% and UDD, compute the net annual premium determined by the equivalence principle. b) Find the probability that this contract makes a profit. c) Compute the gross premium determined by the equivalence principle if the initial expense is $500 plus 10% of the first premium, and if there is a renewal expense of 2% of the annual premium payment for the second and all subsequent premium payments.

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A ten-year term insurance is be issued to a life aged 50. The sum insured is $200,000 and
payable immediately upon death. Premium payments are annual in advance.
a) Using the SOA Standard Ultimate Life Table at i = 5% and UDD, compute the net
annual premium determined by the equivalence principle.
b) Find the probability that this contract makes a profit.
c) Compute the gross premium determined by the equivalence principle if the initial
expense is $500 plus 10% of the first premium, and if there is a renewal expense of 2% of
the annual premium payment for the second and all subsequent premium payments. 

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