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Question - Consider a five-year term insurance issued to a select life aged 40 by a single premium, with sum insured $1 million payable immediately on death. Assume that mortality follows the Standard Select Life Table, with UDD between integer ages, and assume an interest rate of 5% per year.
Required -
(a) Write down an expression for the net loss at issue random variable.
(b) Calculate the net single premium.
(c) Calculate the probability that the contract makes a profit.
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