UECM340% Further Topies in Actuarial Mathematics, Tutorial 5 1. For a universal life policy, you are given: (3) The account value on 1 January 2012 is 10,000, i) ‘The policyholder pays a premium of 1,000 on 1 April 2012, No more premiums are paid in the same year. (iii) ‘The expense chatge is 50 + 3% of the premium. (iv) The costs of insurance deducted fom the premium is 200, (0) The credited interest rate for year 2012 is 8% per annum effective. ‘Assume the policy is still in force on 31 December 2012, Caleulate the account value on 31 December 2012. [11862,7818] 2. Fora specified amount universal life insurance policy, you are given: (i) The face amount of the policy is 100,000. i) The account value on December 31, 2011 was 15,000. i) On January 1, 2012, a premium of 1,000 was made. No other premiums were made in 2012. (iv) The expense charge and the cost of insurance deducted on January 1, 2012 were 100. and 150, respectively. (¥)_ The credited interest rate in 2012 was 6% per annum effective, (vi). The surrender charge applicable in 2012 was 10 per 1000 face amount. Calculate the cash value of the policy on December 31, 2012, [15695] 3. Fora universal life insurance policy, you are given: (i) The death benefit is 50,000 plus the account value at the end of the year of death. ‘The benefit is payable at the end of the year of death. (ii) ‘The account value on December 31, 2011 was 12,000. (iii) On January 1, 2012, a premium of 2,000 was made. No other premiums were made in 2012 (iv) The expense charge deducted on January 1, 2012 was 150. (X)_ The credited interest rate in 2012 was 3% per annum effective. (vi) ‘There is no corridor factor requirement for this policy. (vii) In calculating the cost of insurance, it was assumed that the probability of death in 2012 was 0.0036. The interest rate used was 5% per annum effective. (vii) The policyholder is alive on December 31, 2012, Calculate the aecount value on December 31, 2012. [14089] 1or4UECM340% Further Topies in Actuarial Mathematics, 4. For @ i) (iit) (iy) wv) wi ‘a universal life insurance policy, you are given: ‘The death benefit is $0,000. The benefit is payable at the end of the year of death. ‘The account value on December 31, 2011 was 10,000, (On January 1, 2012, a premium of 1,500 was made. No other premiums were made in 2012 ‘The expense charge deducted on January 1, 2012 was 120. ‘The credited interest rate in 2012 was 2% per annum effective. ‘There is no corridor factor requirement for this policy. (vii) In caleutating the cost of insurance, it was assumed that the probability of death in 2012 was 0.0036. The interest rate used was 6% per annum effective, (viii) The policyholder is alive on December 31, 2012. Calculate the aecount value on December 31, 2012. [ua74.14] Consider a specified amount universal life insurance policy. You are given: @ Gi) ii) ww ) wi The ‘The policyholder is exactly aged 40 at the beginning of the year. ‘The account value at the beginning of the year is 22,000. ‘A the beginning of the year, a premium of 3,000 is made. No other premiums are ‘made in the same year. ‘The death benefit (the face amount) is 120,000, payable at the end of the year of death, ‘The expense charge is a flat amount 50 plus 2.5% of each premium, ‘The corridor factor for the year is 2.5 following basis is used to calculate the cost of insurance: Interest: 3% per annum effective Mortality: IMlustrative Life Table Assume that the credited interest rate for the year is 1% per annum effective. Caleulate the cost of insurance deducted at the beginning of the year. (256.773732316114 ] 2of4UECM340% Further Topies in Actuarial Mathematics, 6 For a specified amount universal life insurance polis ‘you are given: ‘The face amount of the policy is 50,000. ‘The account value on December 31, 2011 was 25,000. A policy loan was taken. As of December 31, 2011, the outstanding balance of the policy loan was 10,000. The interest on the loan in year 2012 was 92%, (iv) On January 1, 2012, a premium of 1,200 was made. No other premiums were made in 2012. (~) The expense charge and the cost of insurance deducted on January 1, 2012 were 100 and 130, respectively. (vi). The credited interest rate in 2012 was 5% per annum effective. (vii) The surrender charge applicable in 2012 was 10 per 1,000 face amount, Calculate the surrender value payable to the policyholder if the policyholder surrendered the policy on December 31, 2012 [15868.5) For a universal life insurance contract, you are given: (The total death benefit is 10,000 plus the account value at the end ofthe year of death. (ii) At the beginning of the year, the account value (before premium payment) was 6000 and a premium of $00 was made. No other premium was made during the year. (ii). The expense charge is 50 plus 5% of each premium. (iv) ‘The cost of insurance for the year was 350. (¥) The credited interest rate for the year was 8%. (vi) The policyholder died during the year. The death benefit is payable atthe end of the year. Let a be the death benefit payable if there is a guaranteed minimum death benefit of 18,000, and let be the death benefit payable if there is no such a guarantee. Find a ~ f. (1439) 3 ofUECM340% Further Topies in Actuarial Mathematics, 8. Consider a universal life insurance sold to (40). The death benefit is 120,000 plus the account value at the end of the year of death, You are given: (The following basis is used to calculate cost of insurance: = Mortality follows the Illustrative Life Table. = Interest rate is 5% per annum effective: Gi) For each premium paid, the expense charge is $50 plus 3% of the premium. (ii) There is no corridor requirement. (iv) The death benefit is payable at the end of the year of death (v)_ The surrender penalties are as follows: ‘Year of surrender 1 2 3 Ba Penalty 3000 2800 2400 1000 Project the cash value at the end of the third year using the following assumptions: = The policy remains in force for three years. ~ Interest is credited to the policyholder’s account at 1% per annum, ~The policyholder pays a premium of 2,000 at the beginning of each year. [2340.02820085714] 9. Consider 3-year term universal life insurance on (40). The death benefit is $0,000 plus the account value at the end of the year of death, The death benefit is payable at the end of the year of death. There is no corridor factor requirement, You profit test the contract using the following basis: (Premiums of 2,000 each are paid at the beginning of years 1, 2 and 3 (ii) The projected account values atthe end of years 1, 2 and 3 are 1,950, 4,100 and 6,400, respectively. (ii) Incurred expenses are 200 at inception, 50 plus 1% of premium at renewal, 100 on surrender, and 100 on death. (iv) ‘The surrender charge is 800 for all durations. (0) The insurer's earned rate of interest is 10% for all three years (vi) Mortality experience is 120% of the Illustrative Life Table. (oii) Surrenders occur at year ends only. The surrender rates for years 1, 2 and 3 are 10%, 20% and 100%, respectively (viii) The insurer holds the full account value as reserve for the contract. 40rd