Calculate the net single premium

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Question - Suppose you are an actuarial consultant hired to determine life insurance premiums in the fictional country of Neverland. Owing to continuing warfare, the mortality rate in the country is extremely high. For all of the following calculations use the mortality table given below, assume the relevant discount rate is 5%.

Mortality Table (Males)

Age

Number Alive

Number Dying

Deaths per 1000

28

100,000

300

3.00

29

99,700

320

3.21

30

99,380

340

3.42

31

99,040

360

3.63

32

98,680

380

3.85

33

98,300

400

4.07

34

97,900

420

4.29

35

97,480

440

4.51

Present Value of $1 at 5%

Year

Factor

1

0.9524

2

0.9070

3

0.8638

4

0.8227

Required -

a) Calculate the premium per $1,000 of coverage on a one-year term policy for a 30-year old male. Show all working.

b) Calculate the net single premium per $1,000 of coverage on a three-year term policy for a 30-year old male. Show all working.

c) Calculate the net level premium per $1,000 of coverage on a three-year term policy for a 30-year old male. Show all working.

Reference no: EM133057742

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