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Assume that you are asked to explain how premiums for a life insurance policy are calculated. Based on the information below, answer the following questions.

Assume that you are asked to explain how premiums for a life insurance policy are calculated. Based on the information below, answer the following questions.

A. Compute the net single premium for a five-year term insurance policy in the amount of $1000 issued to a male at age 30.

B. Compute the net annual level premium for the same policy as in part (a).

C. Is the net annual level premium for the actual premium paid by the policyholder? Explain.

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Present Value of $1 at 5.5% Age at Beginning of Year 30 Number Living at Beginning of Designated Year 9,800,822 9,789,650 9,778,587 9,767,537 9,756,305 31 Number Dying During Designated Year 11,173 11,062 11,050 11,233 11,512 Year 1 2 3 Factor 0.9479 0.8985 0.8516 0.8072 0.7651 32 33 4 34 5

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