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A group of 1000 lives, each age 30, sets up a fund to pay 1000 at the end of the first year for each member
A group of 1000 lives, each age 30, sets up a fund to pay 1000 at the end of the first year for each member who dies in the first year, and 500 at the end of the second year for each member who dies in the second year. Each member pays into the fund an amount equal to the single benefit premium for a special 2- year term insurance. This means each person makes one single payment at time t=0. Mortality follows Standard Select and Ultimate Survival Model Table D and i=0.05. The actual experience of the fund is as follows: Interest Rate Earned Number of deaths 0 0.06 2 0.059 a. Calculate the premium each person pays. b. Calculate the difference, at the end of the second year, between the expected size of the fund as projected from the assumptions at time 0 and the actual fund. c. Calculate the profit/loss due to mortality during the first year of the fund. A group of 1000 lives, each age 30, sets up a fund to pay 1000 at the end of the first year for each member who dies in the first year, and 500 at the end of the second year for each member who dies in the second year. Each member pays into the fund an amount equal to the single benefit premium for a special 2- year term insurance. This means each person makes one single payment at time t=0. Mortality follows Standard Select and Ultimate Survival Model Table D and i=0.05. The actual experience of the fund is as follows: Interest Rate Earned Number of deaths 0 0.06 2 0.059 a. Calculate the premium each person pays. b. Calculate the difference, at the end of the second year, between the expected size of the fund as projected from the assumptions at time 0 and the actual fund. c. Calculate the profit/loss due to mortality during the first year of the fund
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