Contigency I.A Q1

1. A life aged 45 , buys a whole life assurance policy with sum assured 10,000 payable immediately on death. Calculate the gross premium payable by him annually in advance for ten years or until earlier death, allowing for the following expenses: i. Initial expenses of 160 plus 75% of the annual premium. ii. Renewal expenses of 50 (incurred throughout life from year 2 onward) plus 4% of the annual premium (incurred at the time of payment of each premium from year 2 onward). iii. Claim expenses of 2.5% of sum insured. Basis: Ultimate mortality, 6% pa interest. [10 marks ]