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0 A life insurance company in a developed country writes term assurance business. It is deciding how best to adjust premiums for the extra risk
0 A life insurance company in a developed country writes term assurance business. It is deciding how best to adjust premiums for the extra risk in the case of lives that it is willing to accept on special terms. It is considering the following possibilities: (a) Adding a fixed amount c to the qx at each age in the premium formula. (b) Multiplying the xq by an appropriate fixed percentage k% at all ages, where k > 100 (c) Calculating the premiums for someone aged x by assuming an age of x n , with n chosen appropriately. Comment on which of the above would be suitable for the following risks, giving a brief explanation in each case: () The risk resulting from the practice of a dangerous pastime such as bungee jumping from hang gliders. (ii) The risk resulting from residence in an under-developed country. (iii) A family medical history of heart disease
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