Calculate the net premium for this policy

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Reference no: EM132308630

Consider George, 60, who buys a 10 year policy that provides benefits in case of accidental death or dismemberment. The schedule of dismemberment benefits are described as a % of the face amount. If dismemberment or accidental death occurs and benefits are paid then the policy expires. If death occurs due to other causes no benefits are paid. Premiums are paid as long as George is alive and well. The face amount for the policy is $250,000 and loss of a limb (or multiple limbs) will result in payout of 50% of benefits while loss of hearing or sight will result in 80% of benefits. No other benefits are paid out.

You are provided with the following information regarding this situation.

The force of interest is 5%

The force of accidental death is 2%

The force of loss of limb is 0.5%

The force of loss of hearing or sight is 1%

Experience has told us that the decrements never occur together i.e. if accidental death occurs there are no dismemberment events.

Calculate the net premium for this policy.

Reference no: EM132308630

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