Calculate the retrospective gross premium reserve, Finance Basics

Assignment Help:

Question:

A deferred annuity policy is sold to a life aged 45 with the following benefits:

• Basic payments start at $30,000 from age 65, increasing by $2,000 each year;
• If the policyholder dies before age 65, all premiums paid will be refunded without interest immediately on death.

Level premiums are payable annually in advance from age 45 until age 65 or earlier death.

(a) Show that the annual gross premium for this policy is $18,428.47.

(b) Calculate the retrospective gross premium reserve at age 60.

(c) Verify your answer in (b) by the prospective policy value.

Expenses: Initial cost of $1,000 plus 0.6% of each annuity payment and 1% of each premium on collection

Basis: AM92 Ultimate mortality, 4% pa interest


Related Discussions:- Calculate the retrospective gross premium reserve

Calculate the net present values and irr, Task 1 (I) A plc is an investme...

Task 1 (I) A plc is an investment organisation which is considering 2 potential new investments. These are mutually exclusive options in that the acceptance of any one investment

What are the financial fluctuations, What are the financial fluctuations? ...

What are the financial fluctuations? Financial Fluctuations: a. Financial market fluctuations can be a basis of macroeconomic instability. b. Are markets irrational? c

Advantages of stock repurchase, Advantages of Stock Repurchase 1. It m...

Advantages of Stock Repurchase 1. It may be seen as a true signal since repurchase may be motivated with management belief that firm's shares are undervalued. It is true in in

Advantages of development financial institutions, Advantages of Development...

Advantages of Development Financial Institutions Advantages or Functions or can say Case for Development Financial Institutions 1. They grant venture capital 2. They gra

Venture capital, Venture Capital Venture capital is a form of investme...

Venture Capital Venture capital is a form of investment in new small risky enterprises utilized to get them started via specialists called venture capitalists. Venture capital

What are the functions of stock exchange, What are the Functions of Stock E...

What are the Functions of Stock Exchange Main functions performed b stock exchange are as follows: (1) Providing Liquidity and Marketability to existing securities: Sto

Calculate effective annual interest rate, 1 st bank offers you a car loa...

1 st bank offers you a car loan at an annual interest rate of 10% compounded monthly. What effective annual interest rate is the bank charging you?  Solution - Calculate

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd