Question 3

Use the question spreadsheet to answer the following question. Eighteen years ago, a life
insurer sold 1,000 identical endowment assurance policies to lives then aged exactly 37. The
policy term has just ended.

Each policy had a sum assured of £75,000 payable on maturity or immediately on earlier death.

Reserves were calculated using AM92 Ultimate mortality and interest of 3% pa effective. These
are given in the question spreadsheet, along with an extract from the AM92 life table and the
observed number of deaths in each policy year.

Calculate the mortality profit for each policy year assuming that the effective annual rate of
interest is 3%.