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n, O otherwise,
‘The sum of a term life insurance for n years and an n-ycar deferred life insurance is a whole life insurance,
Deferred term insurance 1t is possible to combine deferral and term. The actuarial present value of an insurance
payable only if death occurs between times n and n +m would be denoted by yy, ‘The random variable Z
is ifn 10
Let Z be the random variable for the actuarial present value of this insurance.
Cateutate Var(Z).
‘Answer: Let Z be a 10-year term life insurance for 100 and Z a 10-year deferred whole life insurance for 50. ‘The
appropriate rate to discount a whole life insurance deferred for 10 years back to f = is e-'00"® = ¢-100011005) =
6, and we will use this inthe calculation of the moments of Zp. Then
7 0.0L 7 1040.014005)) -«*s
wa) fears pa) (t-e mene) «195
0.02 as
esout{ 002) safe
Bias stereo)" 45)
| — 8) fe) _ 50
seo) ef) = 3
Because ofthe way the parameters were rigged the expected valve came ou rational, but the second moment won't
on) «ipa
r
2.00 z )
( 0.02 )
(0.02 + 0.08)
10,000
sos
ett - 27%
12 (p= 1209 rao
EZ)
2) = soot( 22!
BYZa} = 100 era
BZ] = 50°"
E27]
2
495.1386 | °
“The variance is therefore 772.9164 ~ (2)
SOA MLC Sey Mass ten
(Copygh ©2009 ASM168 10. INSURANCE: PAYABLE AT MOMENT OF DEATH—MOMENTS—PART J
‘An occasional exem theme isa benefit increasing ata continuously compounded rate, Yoit can net tht rate of,
increase against 6 and then proceed as above.
Examrte 10K A term life insurance provides a benefit at the moment of death of 99 if death occurs at time 4,
15 10, You are given:
(4 = 001
Gi) 6 = 0.05
Zs the actuarial present value of the term life insurance.
Caleulate Var(Z).
Avsivex ‘The net force of interest after subtracting the rato of benefit inerease is 0.05 ~ 0.02 = 0.03. Doubling this
net force of interest will yield the second moment,
5 (1 ~eremvomnen) 1082420
0.071916
_ e tobany
BA Sor a(R)
‘Var(Z) = 0.071916 ~ 0.082420"
5123]
A problem can also have the benefit depend on the single benefit premium. You then solve for the premium,
Exasirus 10G A special insurance coverage pays a benefit of 1 plus a refund ofthe single benefit premium wlthout
interest atthe moment of death, You are given that = 0.01 and 6 = 003, Calculate the single benefit premium,
Answan: Let be the single benefit premium, Then
(14 Aye *M0.01 dt
_ lta
a
Table 11.1 on page 184 summarizes results for standard insurances (of I) payable at the moment of death for
constant force of mortality
Exercises
aut
10.1. A ton-year endowment insurance is payable atthe moment of death, p(t) = 0.01 for > O and 6 = 0.06.
Calculate the single benefit premium. ye eM AUS) eo M/ASY
vow its
10.2. An -year term insurance payable atthe moment of death has actuarial present value of 0.05720,
You are given
@ ws(0) = 0007, 10.
(i) 6 = 005.
Detern
SOA MLC Stay Macnal-6 etn exercises come onthe next page
Cepygh 109) AsheEXERCISES FOR LESSON 10 eSiietstett 169
10.3, {150-F87:16] You are given:
Aen = 0.4275
Gi) 8 = 0055
(i) py 0.045 forall
Cateulate Arm
(A) 0.4600 (B) 0.4775 (©) 0.4950 @) 0.5245 ® 0575
10.4, {SOA3-F03:2] For a whole life insurance of 1000 on (x) with benefits payable at the moment of death:
4 _ [00% Ors 10
o a={oor 1o