Consider a 25-year term insurance issued to a life aged 35 with annual premiums payable throughout the policy term, with sum insured $100,000 payable at the end of the year of death if death occurs during the term. Expenses are as follows: 10% of the 1st annual premium and 2% of each subsequent premium, with an inception expense of $100 and renewal expenses of (at the time of the payment of the 2nd and each subsequent premium) of $15. Calculate the annual premium (using the equivalence principle). Use table D (Standard Ultimate Survival Model) with i=5%.
Consider a 25-year term insurance issued to a life aged 35 with annual premiums payable throughout the policy term, with sum insured $100,000 payable at the end of the year of death if death occurs during the term. Expenses are as follows: 10% of the 1st annual premium and 2% of each subsequent premium, with an inception expense of $100 and renewal expenses of (at the time of the payment of the 2nd and each subsequent premium) of $15. Calculate the annual premium (using the equivalence principle). Use table D (Standard Ultimate Survival Model) with i=5%.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Consider a 25-year term insurance issued to a life aged 35 with annual premiums payable throughout the policy term, with sum insured $100,000 payable at the end of the year of death if death occurs during the term. Expenses are as follows: 10% of the 1st annual premium and 2% of each subsequent premium, with an inception expense of $100 and renewal expenses of (at the time of the payment of the 2nd and each subsequent premium) of $15. Calculate the annual premium (using the equivalence principle). Use table D (Standard Ultimate Survival Model) with i=5%.
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