Risk management and insurance group assignment

Submission date: date of final exam

According to the 2004 CSO mortality table, out of an initial population size of 500,000 male
people 479,000 live at age 40. Assume that an Insurer issued three year Term Insurance to all
these male individuals aged 40 for death benefit of Birr 3,000 each. Assume also that the
premium is to be collected at the beginning of the policy issue, and the death benefits (policy
amount) is to be paid at the end of the year. Also assume that the interest rate is 10%. Each the
insured persons are assumed to bring the same level of risk to the group. The following
additional information is given to you.
CSO Mortality Rate, Male, 2004
Number of Number
Year Age Living of Dying
1 40 479,000 828
2 41 478,172 851
3 42 477,321 873

Required
1. Compute Net Single Premium per insured?
2. Assume each insured pays level premium of Birr 1 throughout the term of the policy
calculate Net level premium per insured?