Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assuming a maximum age of 108 (N = 43) and 4% interest, a life insurer calculating with mortality statistics requires 105,513 capital to pay for

Assuming a maximum age of 108 (N = 43) and 4% interest, a life insurer calculating with mortality statistics requires €105,513 capital to pay for a €10,000 annuity for life, for a 65-year old male. For a 65-year old female, this would be €126,698.

The difference is explained by the expected longer longevity of females:1) How much should a 25-year old female pay to receive €10,000 p.a. starting at 65, for as long as she lives (without mortality)? Hint: calculate an Annuity Due.2) The life insurer is using mortality statistics and knows that out of 10,000,000 new-born, 9,936,640 are alive at 25, 9,662,170 at 50 and 8,861,300 at 65-years.
3) How much should a 25-year old female pay to receive €10,000 p.a. starting at 65, as long as she is alive (with mortality)?

Step by Step Solution

3.53 Rating (163 Votes )

There are 3 Steps involved in it

Step: 1

To calculate the amount a 25yearold female should pay to receive 10000 pa starting at 65 for as long as she lives we need to calculate an annuity due An annuity due is an annuity payment made at the b... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting for Decision Making and Control

Authors: Jerold Zimmerman

8th edition

78025745, 978-0078025747

More Books

Students also viewed these Accounting questions

Question

Define success.

Answered: 1 week ago

Question

How does it change their goals, views, beliefs?

Answered: 1 week ago