For a special fully discrete 3-year term insurance on (45), whose mor-tality follows a double decrement model:(i) Decrement 1 is accidental death; decrement 2 is all other causes of death.(ii)45250041046 24861547246620(ii) i = 0.06(iv) The death benefit is 200,000 for accidental deaths and 100,000 for allother causes.Calculate the annual net premium (paid at the beginning of each year) and thenet premium reserve at the end of year 1 and 2.

Multiple decrement models are the models which shows the causes of various decrements during the…

Answered: Calculate the annual net premium (paid…

Calculate the annual net premium (paid at the beginning of each year) and the net premium reserve at the end of year 1 and 2.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

For a special fully discrete 3-year term insurance on (45), whose mor-
tality follows a double decrement model:
(i) Decrement 1 is accidental death; decrement 2 is all other causes of death.
(ii)
45
2500
4
10
46 2486
15
47
2466
20
(ii) i = 0.06
(iv) The death benefit is 200,000 for accidental deaths and 100,000 for all
other causes.
Calculate the annual net premium (paid at the beginning of each year) and the
net premium reserve at the end of year 1 and 2.

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