Question
An insurance company is considering the introduction of an investment-only product that provides a claim based on the accumulated value of premiums paid by a
An insurance company is considering the introduction of an investment-only product that provides a claim based on the accumulated value of premiums paid by a policyholder. Policyholders would pay annual premiums of X at Year 0, 1, 2, ..., n -1 and would receive a claim equal to the accumulated value of the premium payments at Year n . Unless told otherwise, for the following questions use an interest rate of 4% per annum and assume that n=25. Assume also that, for the moment, and until told otherwise, policyholders do not die during the 25 year policy period.
Question 2
Calculate the accumulated value, at the time that the claim is paid, of all of the premium payments of $5,000.
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