4. 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 yearof death. Assume that (i) commission is 10% of the first premium and 4% of cach subsequentpremium, (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 theannual premium.

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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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Question

4. 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 cach 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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