Question
MQ insurance company issues life annuities. It prices these annuities using the following probabilities. Survival probability Year 1 0.96 2 0.72 3 0.2 4 0
MQ insurance company issues life annuities. It prices these annuities using the following probabilities.
Year | |||
---|---|---|---|
1 | 0.96 | ||
2 | 0.72 | ||
3 | 0.2 | ||
4 | 0 |
The annuities pay $50,000 at the end of each year while the policyholder is alive. MQ insurance believes it can earn 9% p.a. interest on investments. MQ insurance has an initial cost of $50 at the date of issue.
Calculate Alec's probabilities of being alive on 1 January 2020.
Select one:
a. 0.8
b. 0.67
c. 0.603
d. 0.9
Calculate Alec's probabilities of being alive on 1 January 2021.
Select one:
a. 0.22914
b. 0.67
c. 0.37386
d. 0.603
(c) Calculate the fair single premium value which is paid on the issue date of this policy. Round your answer to two decimal places.
Select one:
a. 81644.84
b. 81694.84
c. 82109.01
d. 78512.49
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