Question
An insurer issues a 30-year fully discrete term life insurance of $125,000 on a life aged 55. The gross premium is calculated using equivalence
An insurer issues a 30-year fully discrete term life insurance of $125,000 on a life aged 55. The gross premium is calculated using equivalence principle, and policy values are calculated on a simplified basis. Both bases are outlined in the table below: Premium basis Policy value basis Mortality SULT Interest rate 5% Commissions 50% of the first premium and 2% of each premium thereafter Fixed expenses $800 initially and $30 at the time of each subsequent premium SULT 3% 50% of the first premium only $800 initially You are given that, on the policy value basis A75:10| = 0.65142. Calculate 20V and 28V.
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