7. A life office issues a with-profit whole assurance policy to a select life aged 25 exact. Under the policy, the initial sum assured of 50,000 and attaching bonuses are payable at the end of the year of death. Simple reversionary bonuses at an annual rate of 2.5% of the sum assured are declared at the end of each policy year. Level premiums are payable annually in advance until the policyholder is age 65 or death if earlier. (a) Calculate the annual gross premium using the following basis: Mortality: AM92 (select at issue) Interest: 6% per annum effective Initial expenses: 300 plus 25% of the first premium Renewal expenses: 25 excluding the first annual premium Claim expenses: 0.5% of the total sum assured [16 marks] (b) Calculate the prospective gross premium reserve for the policy after 10 years using the following basis: Mortality: AM92 Ultimate Interest: 4% per annum effective Future bonuses 3% per annum Renewal expenses: 35 at the start of the policy while still in force Claim expenses: 0.5% of the total sum assured [10 marks] [Total: 26 marks] 7. A life office issues a with-profit whole assurance policy to a select life aged 25 exact. Under the policy, the initial sum assured of 50,000 and attaching bonuses are payable at the end of the year of death. Simple reversionary bonuses at an annual rate of 2.5% of the sum assured are declared at the end of each policy year. Level premiums are payable annually in advance until the policyholder is age 65 or death if earlier. (a) Calculate the annual gross premium using the following basis: Mortality: AM92 (select at issue) Interest: 6% per annum effective Initial expenses: 300 plus 25% of the first premium Renewal expenses: 25 excluding the first annual premium Claim expenses: 0.5% of the total sum assured [16 marks] (b) Calculate the prospective gross premium reserve for the policy after 10 years using the following basis: Mortality: AM92 Ultimate Interest: 4% per annum effective Future bonuses 3% per annum Renewal expenses: 35 at the start of the policy while still in force Claim expenses: 0.5% of the total sum assured [10 marks] [Total: 26 marks]