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Math 472 HW 7 Solutions - MATH 472/567 Actuarial Theory...

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MATH 472/567: Actuarial Theory II/Topics in Actuarial Theory I Homework #7: Spring 2011 Assigned March 9, due March 16 1. For a fully discrete whole life insurance of 100,000 on (35): (i) Percent of premium expenses are 10% per year. (ii) Per policy expenses are 25 per year. (iii) All expenses are paid at the beginning of the year. (iv) Mortality follows de Moivre’s Law with ω = 95, i = 0.05. Find the level annual expense-loaded premium using the equivalence principle. (2466.38) 2. For a fully discrete 10-year endowment insurance of 10,000 on (50): (i) Percent of premium expenses consist of commissions equal to 50% of the gross premium in the first year followed by commissions equal to 5% of gross premium in renewal years (years 2 through 10). Each expense is incurred at the beginning of the year. (ii) Other expenses include an acquisition expense of 20 due at policy issue, a settlement expense of 180 due at the time the benefit of 10,000 is paid, and an annual level maintenance expense of 25 at the beginning of each year. (iii) Mortality follows the Illustrative Life Table, and
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