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Unformatted text preview: Practice Questions 3 – ACTSC 331, FALL 2011 1. In a fully continuous whole life insurance on (50), premiums are charged continuously at an annual rate of 200. A death benefit of b will be paid at the time of death. Assume that mortality follows De Moivre’s law with l x = 90- x and the rate of interest is 5%. (a) Calculate b by the equivalence principle. (b) Calculate the benefit reserve at the end of the 15th policy year. (c) Let 15 L be the prospective loss function at the end of the 15th policy year, given that (50) is still alive then. Calculate V ar ( 15 L | T 50 > 15). 2. Consider a 20-Payment years, 30-year endowment insurance on (40). In this insurance, a death benefit of 1500 is payable at the time of death if death occurs during the 30- year period. A maturity value of 1000 will be paid if (40) is still alive at the end of the 30-year term. Premiums are charged continuously at an annual rate of π as long as (40) survives during the 20-year period....
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- Fall '09
- Endowment policy, Term life insurance, death beneﬁt