Year t - of year Profit vector Survival probability Profit...

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Year t Premium Expense Interest Mortality Rate DB+ termination expense Expected Death cost 1 8000 500 525 0.004171 20100 83.84 2 8000 30 557.9 0.006180 21300 131.63 3 8000 35 557.55 0.007140 22572 161.16
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Interest=(Premium-expense)*7% Mortality rate from yellow book DB=20000*(1+6%)^(t) Year t Dependent Surrender rate Surrender Value+terminat’ n expense Expected surrender cost Maturity Value+ Terminat’n expense Survival probability Expected Maturity cost 1 0.149374 8340 1245.78 0 0.846455 0 2 0.049691 16827.2 836.16 0 0.944129 0 3 0 0 0 26302.35 0.99286 26114.55 Dependent surrender rate=(1-Mortality rate)*surrender rate Surrender value for year 1=8000*1.03 Surrender value for year 2=8000*1.03^2+8000*1.06 Maturity value+ terminat’n expense=20000*1.06^3*1.1+100 Survival probability=1-Mortality rate-Dependent surrender rate Year t Cash flow Reserve at the start of year Interest on Reserve Reserve at the end
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Unformatted text preview: of year Profit vector Survival probability Profit signature 1 6695.38 6336.14 359.24 1 359.24 2 7560.11 7485.50 523.98 14547.34 1022.25 0.846455 865.29 3-17753.16 15408.21 1078.57-1266.38 0.799163-1012.04 Cash flow= Premium-Expense+Interest-Expected death cost-Expected surrender cost-Expected maturity cost Reserve at the start of year= 20000*1.06^(t-1)*A 57+t-1:3-(t-1) -Pnet* 57+t-1:3-(t-1) Pnet=20000*A 57:3 / 57:3 Interest on reserve=Reserve at the start of year*0.07 Reserve at the end of year=(t+1)Reserve at the start of year*survival probability Profit vector=cash flow+Reserve at the start of year+Interest on reserve-reserve at end of year Profit signature= profit vector*survival probability...
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Year t - of year Profit vector Survival probability Profit...

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