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Homework Assignment 10:
(1) An insurance company is selling the oneyear term insurance that pays an extra benefit in case of
accidental death that is described on page 29.
The company wishes to have at least a 95% probability
that premiums with a relative security loading of 0.20 are adequate to cover claims.
Using the normal
approximation, determine the minimum number of policies that must be sold.
(Ans 29,999.3, which
rounds up to 30,000 policies).
(2) Policyholders covered by a group insurance contract fall into three classes:
Class
No. in Class
Claim Probability
Distribution of Claim Amt.
1
400
0.03
Exponential with
λ
= 5
2
300
0.07
Exponential with
λ
= 3
3
200
0.10
Exponential with
λ
= 2
Determine (a) the mean of the aggregate claims for the group, (b) the variance of the aggregate
claims for the group and (c) the relative security loading so that the probability that total claims
will exceed total premiums is 0.05.
(Ans 19.4, 14.9489, 0.33)
(3)
Consider a group life insurance contract with an accidental death benefit.
Assume that for all members
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This note was uploaded on 05/11/2011 for the course STOR 472 taught by Professor Charlesdann during the Spring '11 term at University of North Carolina School of the Arts.
 Spring '11
 CharlesDann

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