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Assuming you are currently working in the product development department of an insurance company. You are proposing to your head of department to improve a
Assuming you are currently working in the product development department of an insurance company. You are proposing to your head of department to improve a life annuity product by adding a death benefit that will be paid at the end of the year of death. This new payment is in addition to an existing payment of RM12,000 to the annuitant at the beginning of each year. Assuming a discount rate, d, of 8%, determine the death benefit that maximizes the variance of the present value random variable of the new product.
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