Practice Session

Question

A life insurance company issues a 10-year term assurance policy to a life aged exact. The sum assured which is payable immediately on death is given by the formula:

Where t denotes the curtate duration in years since the inception of the policy.

Level premiums are payable monthly in advance throughout the term of the policy or until earlier death.

Calculate the monthly premium for this policy using the following basis:

Mortality: AM92 Select

Interest: 4% per annum

Expenses: Nil

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Answer

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The EPV of Benefits

The death benefit is  50,000 immediately on death in the first year, 55000 on the death in the second year, and so on up to 95,000 on death in the tenth year.

So:

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