(i) commission is 10% of the first premium and 4% of each subsequent premium, (ii) other expenses are $50 at issue, and $5 at each subsequent premium date, (iii) mortality follows the Standard Select Life Table, and (iv) interest is 5% per year. Calculate the annual premium.
(i) commission is 10% of the first premium and 4% of each subsequent premium, (ii) other expenses are $50 at issue, and $5 at each subsequent premium date, (iii) mortality follows the Standard Select Life Table, and (iv) interest is 5% per year. Calculate the annual premium.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A select life aged 60 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 4% of each subsequent premium, (ii) other expenses are $50 at issue, and $5 at each subsequent premium date, (iii) mortality follows the Standard Select Life Table, and (iv) interest is 5% per year. Calculate the annual premium.
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