Consider a fully discrete 5-year term insurance issued to a selected life aged 60, with sum $100000. Assume that mortality follows the Standard Select Life Table, and assume an interest rate of 5% per year. (a) Calculate the net annual premium. (b) Calculate the probability that the contract makes a profit.
Consider a fully discrete 5-year term insurance issued to a selected life aged 60, with sum $100000. Assume that mortality follows the Standard Select Life Table, and assume an interest rate of 5% per year. (a) Calculate the net annual premium. (b) Calculate the probability that the contract makes a profit.
College Algebra
7th Edition
ISBN:9781305115545
Author:James Stewart, Lothar Redlin, Saleem Watson
Publisher:James Stewart, Lothar Redlin, Saleem Watson
Chapter8: Sequences And Series
Section8.4: Mathematics Of Finance
Problem 2E
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![Consider a fully discrete 5-year term insurance issued to a selected life aged 60, with sum $100000.
Assume that mortality follows the Standard Select Life Table, and assume an interest rate of 5%
per year.
(a) Calculate the net annual premium.
(b) Calculate the probability that the contract makes a profit.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7f5d7e33-a769-491d-918b-b3ccb8916743%2Ff7b8c876-a66e-4e20-b2e1-8ad534cf2158%2Fowxkj_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Consider a fully discrete 5-year term insurance issued to a selected life aged 60, with sum $100000.
Assume that mortality follows the Standard Select Life Table, and assume an interest rate of 5%
per year.
(a) Calculate the net annual premium.
(b) Calculate the probability that the contract makes a profit.
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