Calculate the level annual gross premium

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Reference no: EM132767834

Question - Consider a 10 year endowment insurance policy to [45] with benefit amount of $150,000. If there is a death benefit, it is payable at the end of the year of death. Level annual premiums are to be paid at the beginning of each year that the policy is in force.

a) Calculate the annual net premium using the equivalence principle and the S..M@5%.

b) Suppose 100 such policies are issued to independent lives all age 45 and newly selected. Calculate the annual net premium per policy such that the probability that the total loss for all 100 policies is positive will be .025. Use the normal approximation and previous assumptions.

c) For the same policy, assume expenses of $900 + 30% of the gross premium in the first year, and $50 at the beginning of each of the other 9 years. Use the equivalence principle and previous assumptions to calculate the level annual gross premium.

d) Using the expense assumptions and the premium calculated in part c), calculate the present value of the loss if death occurs at age 47.2, and also if the insured survives to age 55.

Reference no: EM132767834

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