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Calculate the minimum premium an insurance company

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Calculate the minimum premium an insurance company should charge for $1 million 2-year term life insurance policy issued to a woman age 50. Assume that the premium is paid at the beginning of each year and that the interest rate is zero. Note that: the probability of death within one year at age 50 = 0.003182, and the probability of death within one year at age 51 = 0.003473.

Q: What is the value of X if the interest rate is 3% per annum?

Q: What is the value of X if the interest rate is 4% per annum compounded semiannually and the payout occurs halfway through the year or happens at time 18 months (moving to second year)?

Reference no: EM132630457

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