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

Expectation theory, Expectation Theory The theory states here that the...

Expectation Theory The theory states here that the yield curve depends on the expectation concerning with future inflation rates. The rate on long-term bonds will exceed, If i

Functions of central bank, Functions of Central Bank a) Ensure Economi...

Functions of Central Bank a) Ensure Economic stability b) Lender to the government c) Printing of currency notes d) Banker to the government e) Lender of last reso

Classification of debenture finance, Classification of Debenture Finance ...

Classification of Debenture Finance i) Secured Debentures These are those types of debentures which a company will secure generally in two ways, secured along with a fixe

The constant growth model, You have the following information for Stardusts...

You have the following information for Stardusts: Current EPS is $1.79.  The current dividend is $.68 per share.  The return on equity is 24%.  The present price is $49.22. a.

Decision Analysis, 2 Questions QUESTION #1 LAPTOP SELECTION Jonna is in ...

2 Questions QUESTION #1 LAPTOP SELECTION Jonna is in market to buy a new laptop. Six different machines are under consideration. All laptops are essentially the same, but they v

Throughput accounting, state a case where throughput according system is re...

state a case where throughput according system is required

Identified two mutually exclusive projects, The director of capital budgeti...

The director of capital budgeting for a firm has identified two mutually exclusive projects, A and B, with the following expected net cash flows: Expected Net Cash Flows Year

Primary markets - financial markets, Primary Markets - Financial Markets ...

Primary Markets - Financial Markets These are markets such deal along with securities that have been issued for the first moment. The money flows directly from transferor or t

Finance, Spot transaction hedge/Money market hedge There are three parts t...

Spot transaction hedge/Money market hedge There are three parts to this question. Please answer all parts. The Chicken Company, a company with headquarters in Switzerland, has a r

Mm dividend irrelevance theory, MM Dividend Irrelevance Theory Such wa...

MM Dividend Irrelevance Theory Such was advanced via Modigliani and Miller in 1961.  The theory asserts to a firm's dividend policy has no effect on cost of capital and on its

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