What is the loss on each remaining policy for second year

Reference no: EM131000992

A 2-year term insurance policy on (50), with a constant death benefit of 1000, is purchased by two-level annual premiums. Policyholders who choose to lapse the policy at time 1 will receive ₁V as a cash value. Assume that mortality and interest follow the projected pattern, and that the premium charged is the net premium. Suppose, however, that a typical group of people age 51 who have purchased insurance at age 50 can be divided into two groups. Half of them are healthy and half are not. The non-healthy group can expect to have twice as many deaths over the following year as the healthy group. Suppose that q₅₁ = 0.03. What is the loss on each remaining policy for the second year, assuming:

(a) All of the healthy policyholders at age 51 lapse the policy at that time, and none of the unhealthy ones do;

(b) One-half of the healthy policyholders, and one-quarter of the unhealthy policy- holders, lapse the policy at age 51.

Reference no: EM131000992

Questions Cloud

What is the total per contract gain for the year : On the other hand, the interest earned during that year was 22% rather than 20%. What is the total per contract gain for this year?

What was the amount of net sales for 2011 : What was the amount of net sales for 2011?

Write a position paper using classical argument structure : Consult at least seven sources for your paper including at least one article from a database and one scholarly article (these can be the same article if it meets both criteria). List all sources in your references list.

How you will acquire and incorporate diverse ideas : Explain how you will acquire and incorporate diverse ideas and insure that diverse needs were met in addressing these issues. Describe how you will involve your management team and work with them and the internal and external environments to impleme..

What is the loss on each remaining policy for second year : What is the loss on each remaining policy for the second year, assuming all of the healthy policyholders at age 51 lapse the policy at that time, and none of the unhealthy ones do

What price premium does sweet crude usually receive : In the middle of the fourth column it says the SPR is releasing only "sweet" crude. Why should this type of crude attract more interest from buyers? What price premium does "sweet" crude usually receive?

A company adopts the dollar value lifo inventory method : Calculate the inventory value at the end of 2011 using the dollar-value LIFO method.

Show that the reserve is higher for the starred rates : Assume that death benefits are nonincreasing. Show that the reserve at time n is higher for the starred rates (the steeper curve).

Johns account was credited by the supplier : John's returned some of the merchandise purchased in (1). The cost of the merchandise was $600 and John's account was credited by the supplier.

User Account

All Pages