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Assume S=0.05 for this problem. Answer the questions below. a) Explain why an insurance company holds reserves. b) Under what circumstances would you expect reserves to be negative? Explain. c) Assume a constant force of mortality 4, =0.01. Calculate the value of V. -d) Assume a force of mortality, = 1 100-x Calculate the value of V.. 1 e) Assume a force of mortality = -.A fully discrete whole life policy for $150,000 is issued 100-x to a person age 0. Expenses are paid at the beginning of the year and are $500 and 15% of premium in the first year and $100 and 2% of premium in renewal years. Calculate the expense loaded reserve one year after policy issue.

Assume S=0.05 for this problem. Answer the questions below. a) Explain why an insurance company holds reserves. b) Under what circumstances would you expect reserves to be negative? Explain. c) Assume a constant force of mortality 4, =0.01. Calculate the value of V. -d) Assume a force of mortality, = 1 100-x Calculate the value of V.. 1 e) Assume a force of mortality = -.A fully discrete whole life policy for $150,000 is issued 100-x to a person age 0. Expenses are paid at the beginning of the year and are $500 and 15% of premium in the first year and $100 and 2% of premium in renewal years. Calculate the expense loaded reserve one year after policy issue.

Algebra & Trigonometry with Analytic Geometry
Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter2: Equations And Inequalities
Section2.7: More On Inequalities
Problem 44E
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Assume S=0.05 for this problem. Answer the questions below. a) Explain why an insurance company holds reserves. b) Under what circumstances would you expect reserves to be negative? Explain. c) Assume a constant force of mortality , = 0.01. Calculate the value of V. -d) Assume a force of mortality = 1 100-x -. Calculate the value of V.. 1 e) Assume a force of mortality μ -. A fully discrete whole life policy for $150,000 is issued 100-x to a person age 0. Expenses are paid at the beginning of the year and are $500 and 15% of premium in the first year and $100 and 2% of premium in renewal years. Calculate the expense loaded reserve one year after policy issue.
Transcribed Image Text:Assume S=0.05 for this problem. Answer the questions below. a) Explain why an insurance company holds reserves. b) Under what circumstances would you expect reserves to be negative? Explain. c) Assume a constant force of mortality , = 0.01. Calculate the value of V. -d) Assume a force of mortality = 1 100-x -. Calculate the value of V.. 1 e) Assume a force of mortality μ -. A fully discrete whole life policy for $150,000 is issued 100-x to a person age 0. Expenses are paid at the beginning of the year and are $500 and 15% of premium in the first year and $100 and 2% of premium in renewal years. Calculate the expense loaded reserve one year after policy issue.
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