Question 2.

Suppose that Mr. Campbell, a 40 year old customer, wants to purchase a single premium two year term life insurance policy with a face amount of 100,000 (paid to Mr. Campbells family is he dies). Assume that the probability of dying at age 40 (41), according to a standard mortality table is 0.00302 (0.00329).

Interest rate equals 10 percent per year.

How much should the insurance company charge Mr. Campbell (ignoring expenses and profit loading) to cover his expected claim costs