Krzysztof Ostaszewski http://www.math.ilstu.

edu/krzysio
Course M seminar: http://www.math.ilstu.edu/actuary/prepcourses.html
Course M Manual: http://www.neas-seminars.com/registration/

Practice Problem for December 16, 2006

November 2006 SOA Course M Examination, Problem No. 3

For a fully discrete whole life insurance of 1000 on (50), you are given:
(i) 1000P50 = 25.
(ii) 1000A61 = 440.
(iii) 1000q60 = 20.
(iv) i = 0.06.
Calculate 1000 ! 10V50 .

A. 170 B. 172 C. 174 D. 176 E. 178

Solution.
We have
1 1
a!!50 = = ! 12.254335,
P50 + d 0.025 + 0.06
1.06
and
1 " A61 1 " 0.02 1 " 0.44
a!!60 = 1 + vp60 ! a!!61 = 1 + vp60 ! = 1+ ! # 10.1466667.
d 1.06 0.06
1.06
Therefore,
# a!! & # 10.1466667 &
1000 ! 10V50 = 1000 ! % 1 " 60 ( ) 1000 ! % 1 " ( ) 171.993693.
$ a!!50 ' $ 12.254335 '
Answer B.

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