Explain how reserves will be affecte for whole life policies

Reference no: EM131001966

1. A whole life policy with a level death benefit of 10 000 carries net annual premium of 100 payable for life. The rate of discount is a constant 0.04. At time n, the policyholder wishes to reduce their annual premium payment to 25, and is told they can do so, but the death benefit will be reduced to 7000. Assuming that the entire reserve is available as a nonforfeiture benefit, find nV.

2. Suppose that a mortality table used to calculate reserves is altered by adding a positive constant to each value of qx. Explain how the reserves will be affected, for whole life policies with a constant death benefit and level premiums.

Reference no: EM131001966

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