Question 13 [3 marks] What is the probability of a new policyholder being alive at the start of the third year (round your answer to four decimal places)? a. 0.050 0 b. 0.260 4 c. 0.340 0 d. 0.669 6

Question 14 [3 marks] What is a new policyholders probability of dying during the third year (round your answer to four decimal places)? a. 0.260 4 b. 0.328 1 c. 0.330 4 d. 0.669 6

Question 15 [3 marks] Calculate the fair single premium paid on the issue date of an AMZ Life life annuity. Round your answer to two decimal places. a. $103 164.84 b. $103 214.84 c. $109 064.14 d. $120 847.96

The insurance company, AMZ Life, issues life annuities. It prices its annuities using the following probabilities. Survival probabilities Probability of surviving from start of year to end of year Year 1 0.93 2 0.72 3 0.51 4 0 The annuities pay $60000 at the end of each year while the policyholder is alive. AMZ Life insurance believes it can earn 4% p.a. interest on invest- ments. It also has to provide for initial expenses of $50 at the date of issue. The insurance company, AMZ Life, issues life annuities. It prices its annuities using the following probabilities. Survival probabilities Probability of surviving from start of year to end of year Year 1 0.93 2 0.72 3 0.51 4 0 The annuities pay $60000 at the end of each year while the policyholder is alive. AMZ Life insurance believes it can earn 4% p.a. interest on invest- ments. It also has to provide for initial expenses of $50 at the date of issue