ADDING AN INSURANCE ELEMENT

The insurance company is now going to add an insurance element to the policy described in the previous questions and hence will need to decide what mortality assumptions they are going to use before performing any further projections. They have decided that it is appropriate to use a transition intensity of mortality structure of =+.

It has been observed in a population that the probability of a 30 year old surviving until age 55 is equal to 0.94, and the probability of a 30 year old surviving until age 90 is equal to 0.30. Assuming the above transition intensity of mortality structure and that =0.09, calculate and .

*Enter the numerical value of (to 3 significant figures):

*Enter the numerical value of (to 3 significant figures):