Section19 - Example 1: Consider a 10, 000 fully discrete...

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Example 1: Consider a 10 , 000 fully discrete whole life in- surance. Let π denote an annual premium for this policy and L ( π ) denote the loss-at-issue ran- dom variable for one such policy on the basis of the Illustrative Life Table, 6% interest and issue age 35 . a) Determine the premium, π a , such that the distributions of L ( π a ) has a mean 0 . Calculate the variance of L ( π a ) . b) Approximate the smallest non-negative pre- mium, π b , such that the probability is less than 0 . 5 that the loss L ( π b ) is positive. Find the vari- ance of L ( π b ) . c) Determine the premium, π c , such that the probability of a positive total loss on 100 such independent policies is 0 . 05 by the normal ap- proximation. 1
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Example 2: LC-86 L 1 is the loss-at-issue random variable for a fully continuous whole life insurance of 1 on the life of ( x ) with a net level annual premium determined by the Equivalence Principle.
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This note was uploaded on 09/27/2009 for the course ACT ACT348 taught by Professor Badescu during the Fall '08 term at University of Toronto.

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Section19 - Example 1: Consider a 10, 000 fully discrete...

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