(a) What is the annual premium payment required by this policy? (3)

(b) If the policy holder wants to surrender the policy and guarantee the total premium he pays in the last column (assuming survival and not getting major disease), how many years must he wait? If the non-guaranteed terminal bonus is included in the surrender benefit, how many years must he wait to recover the total premium payment? (6)

(c) Assume the premium paid by the policyholder can earn an 1% interest rate from an outside asset, and assume the insured survives without getting major diseases. Add a column that calculate the future value of total premium payment at the end of each policy year. [Hint: You may use the NPV function and FV function in Excel. See here for the use of NPV. ](6)

The following table present the cash flow arrangement of a life insurance (including critical illness) policy. Use the information in the table to answer the following questions. Assume all premiums are paid at the beginning of each year, and all payments (death benefit and surrender value) are paid at the end of each year. : 45 12.00 PRUmyhealth lifelong crisis protector IMPORTANT: THIS IS A SUMMARY ILLUSTRATION OF THE BENEFITS OF YOUR POLICY AND IN NO WAY AFFECTS THE TERMS AND CONDITIONS STATED IN THE POLICY DOCUMENT. Name : Mr. Chan Tai Man Age Next Birthday (ANB) Sex: Male (Non-smoker) Initial Sum Assured USS 128,000 Initial Annual Premium : US$ 4,879.36 Benefit Term Whole Life Premium Torm : 20 years Basic Plan - Hlustration Summary (Currency: USS) Surrender Renait Major Disease Benefit/Death Benefit Guaranteed Sum Assured Cash Value of PRUmyhealth Face Valueel Guaranteed Non-Guaranteed lifelong crisis Free 10-year Non- Guaranteed End of Cash Value Terminal Bonus Total protector crisis cover Terminal Bonus Total Total Policy Year (A) (6) (A)B) (C) (D) (E) (C)*(0)+(E) Premiums 128,000 44800 ol 172,800 4,870 120,000 44.800 ol 172,800 3.790 366 . 366 128,000 44.800 172.00 14,638 978 . 978 120,000 44.800 172.000 19.517 1,630 383 2.213 128,000 44.800 1.276 174,076 24.397 2.820 143 3.67 120,000 44 800 1.500 174,308 29.216 7 1.262 5.531 120,000 44.800 1748 174,548 34,156 . 5.856 2.152 8.007 120,000 44 800 2150 174,043 39,035 7.665 3,395 11.00 120,000 44.800 3.25 178,135 43.914 10 9.750 14.765 128,000 4.BOD 5.000 177,804 48,794 11 6,320 18395 120.000 0 31.441 159.441 53,673 12 14 7,051 22.50 120.000 34874 162,874 58,552 13 19,030 10,059 29.089 128,000 38.392 166,392 63,432 14 23.000 12.540 36.540 120.000 41.000 160,000 68,311 15 29,270 15.945 45,221 128,000 45,587 173.687 73,190 50,222 113,054 120,000 60271 197.271 07.17 25 87 28 72.455 180.489 128,000 97217 225,917 97,57 92.700 103,925 196.637 128,000 133,413 261.413 GANGS 97.567 53432 50,222 113.654 128,000 60271 197,271 97,517 QAND 70 B7 128 72,855 180.489 120.000 37217 225,0171 37,517 CANB 75 92.703 103,129 198.637 128,000 +33413 261413 97,517 QAND 10 37 SP 146,377 213,364 128,000 177212 306,2121 S7 587 QANB BS 120.000 226,400 364,400 128,000 226 400 354,400 97.517 CANB 90 128.000 291,104 419.104 128,070 291.104 419,104 97,517 @ANG 95 120.000 406,312 534,312 125,000 406,312 BAND 100 534,312 97,517 120.000 54,186 125,000 548383 S7.517 Notes: (1) The above is only an illustration summary of the major benefits of your policy. You are advised to contact your consultant or the Company for more information on this plan. This illustration in no way affects the terms and conditions stated in the Policy Document. (2) The above ilustration relates only to your Basic Plan excluding any riders or additional benefits (if applicable). > The above values are for illustrative purposes only and assume that all premiums are paid in full when due: (i) na Advanced Claim has been paid and (the Sum Assured of your Basic Plan remains unchanged throughout the Benefit Term. (4) Terminal Bonus is a one-off bonus payable upon payment of Major Disease Benefit (except for Advanced Claim.). Death Benefit or upon termination of the policy, if any of them occurs from the 5th policy anniversary onwards. The face value of Terminal Bonus will be paid when the Company is paying the Major Disease Benefit or Death Benefit, but only the cash value of Terminal Bonus wil be paid when the policy is surendered in whole or in part. These values are determined and calculated based on the Company's experiences and the current projections of surrender values and bonus scales in relation to a number of factors including, but not limited to claims, persistency and investment assumptions. Hence, the values are not guaranteed and are subject to review and adjustment at the absolute discretion of the Company. You should note that the actual values payable under the policy may differ significantly from the above illustrated value (5) The Company reserves the right to review the premium rates on each policy anniversary and adjust the premium rates accordingly across a particular risk close The following table present the cash flow arrangement of a life insurance (including critical illness) policy. Use the information in the table to answer the following questions. Assume all premiums are paid at the beginning of each year, and all payments (death benefit and surrender value) are paid at the end of each year. : 45 12.00 PRUmyhealth lifelong crisis protector IMPORTANT: THIS IS A SUMMARY ILLUSTRATION OF THE BENEFITS OF YOUR POLICY AND IN NO WAY AFFECTS THE TERMS AND CONDITIONS STATED IN THE POLICY DOCUMENT. Name : Mr. Chan Tai Man Age Next Birthday (ANB) Sex: Male (Non-smoker) Initial Sum Assured USS 128,000 Initial Annual Premium : US$ 4,879.36 Benefit Term Whole Life Premium Torm : 20 years Basic Plan - Hlustration Summary (Currency: USS) Surrender Renait Major Disease Benefit/Death Benefit Guaranteed Sum Assured Cash Value of PRUmyhealth Face Valueel Guaranteed Non-Guaranteed lifelong crisis Free 10-year Non- Guaranteed End of Cash Value Terminal Bonus Total protector crisis cover Terminal Bonus Total Total Policy Year (A) (6) (A)B) (C) (D) (E) (C)*(0)+(E) Premiums 128,000 44800 ol 172,800 4,870 120,000 44.800 ol 172,800 3.790 366 . 366 128,000 44.800 172.00 14,638 978 . 978 120,000 44.800 172.000 19.517 1,630 383 2.213 128,000 44.800 1.276 174,076 24.397 2.820 143 3.67 120,000 44 800 1.500 174,308 29.216 7 1.262 5.531 120,000 44.800 1748 174,548 34,156 . 5.856 2.152 8.007 120,000 44 800 2150 174,043 39,035 7.665 3,395 11.00 120,000 44.800 3.25 178,135 43.914 10 9.750 14.765 128,000 4.BOD 5.000 177,804 48,794 11 6,320 18395 120.000 0 31.441 159.441 53,673 12 14 7,051 22.50 120.000 34874 162,874 58,552 13 19,030 10,059 29.089 128,000 38.392 166,392 63,432 14 23.000 12.540 36.540 120.000 41.000 160,000 68,311 15 29,270 15.945 45,221 128,000 45,587 173.687 73,190 50,222 113,054 120,000 60271 197.271 07.17 25 87 28 72.455 180.489 128,000 97217 225,917 97,57 92.700 103,925 196.637 128,000 133,413 261.413 GANGS 97.567 53432 50,222 113.654 128,000 60271 197,271 97,517 QAND 70 B7 128 72,855 180.489 120.000 37217 225,0171 37,517 CANB 75 92.703 103,129 198.637 128,000 +33413 261413 97,517 QAND 10 37 SP 146,377 213,364 128,000 177212 306,2121 S7 587 QANB BS 120.000 226,400 364,400 128,000 226 400 354,400 97.517 CANB 90 128.000 291,104 419.104 128,070 291.104 419,104 97,517 @ANG 95 120.000 406,312 534,312 125,000 406,312 BAND 100 534,312 97,517 120.000 54,186 125,000 548383 S7.517 Notes: (1) The above is only an illustration summary of the major benefits of your policy. You are advised to contact your consultant or the Company for more information on this plan. This illustration in no way affects the terms and conditions stated in the Policy Document. (2) The above ilustration relates only to your Basic Plan excluding any riders or additional benefits (if applicable). > The above values are for illustrative purposes only and assume that all premiums are paid in full when due: (i) na Advanced Claim has been paid and (the Sum Assured of your Basic Plan remains unchanged throughout the Benefit Term. (4) Terminal Bonus is a one-off bonus payable upon payment of Major Disease Benefit (except for Advanced Claim.). Death Benefit or upon termination of the policy, if any of them occurs from the 5th policy anniversary onwards. The face value of Terminal Bonus will be paid when the Company is paying the Major Disease Benefit or Death Benefit, but only the cash value of Terminal Bonus wil be paid when the policy is surendered in whole or in part. These values are determined and calculated based on the Company's experiences and the current projections of surrender values and bonus scales in relation to a number of factors including, but not limited to claims, persistency and investment assumptions. Hence, the values are not guaranteed and are subject to review and adjustment at the absolute discretion of the Company. You should note that the actual values payable under the policy may differ significantly from the above illustrated value (5) The Company reserves the right to review the premium rates on each policy anniversary and adjust the premium rates accordingly across a particular risk close