Actuarial.docx - Answer Here,the age of 40 does not matter...

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Answer Here,the age of 40 does not matter as we need to find the reserve needed when the insured attains the age of 50.Assuming that the insured attained the age of 50,the insurance can be represented as a combination of two contracts with level payments,whole life insurance with a benefit of $1000,and the 10-year term with the same benefit. The total APV of the combination is: 1000 ´ A 50 +1000 ´ A 1 50: ´ 10 =333.33+197.81 =531.14 After time t=10, the insured pays only 10 years more. The APV of the premium annuity starting at t=10 is the premium multiplied by ´ a 50 : ´ 10 = 1 δ ( 1 ´ A 50 : ´ 10 ) .Now, ´ A 50 : ´ 10 = A 1 50: ´ 10 + 10 E 10 = 604.38 / 1000. Therefore, ´ a 50 : ´ 10 = 1 0.06 ( 1 ´ A 50 : ´ 10 ) 6.593 ´ 6 . Thus, for P=66, the APV for the premium quality is 66- 6.5936 =435.182 Thus, 10 ´ V = 531.14 435.182 = 98.958
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Q6) Answer Consider the "standard" fully discrete whole life insurance issued to (65). When writing the
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