Background Your company, Awesome Benefits Company, sells the following individual disability insurance product. . Level annual premiums are paid while healthy and under age 65. Premium rates are guaranteed and premiums are due at the beginning of the year . Upon disability, a level monthly benefit is paid while the policyholder is unable to work (a status that is defined in the policy) . Benefit payments commence after a 90-day waiting period (also called an elimination period) Benefit payments are 60% of salary and cease when the policyholder turns age 65, dies, or recovers The target market is highly paid professionals (such as doctors and lawyers) and corporate executives. The product is sold through insurance agents. The per-unit premium for each policy is set equal to the issue age - for example, a 42-year old with a $100,000 salary would pay $4,200 annually while a 30-year old with a $50,000 salary would pay $1,500 annually. Given recent economic volatility, Awesome Benefits Company has a conservative investment strategy. The investment strategy has three priorities: 1. It is required to hold at least a certain percentage of its portfolio in liquid, short-term assets. 2. It wants to duration match assets and liabilities. 3. It prefers to invest in United States government securities. Awesome Benefits Company uses profit as a percent of premium as its primary profit measure. Using a discount rate of 5%, the required present value of distributable earnings as a percentage of premium is 9%. Management also desires an IRR greater than 12%. For this assessment, you can ignore the claims paying ability of the company and any other plan design features not mentioned in this assessment