Rainie owns a $200,000 house and has a 5% chance of experiencing a fire in any given year. Assume that only one fire per year can occur and that if a fire occurs, the house is completely destroyed. Suppose that Rainie purchases a full insurance contract from Lemonade Insurance Company for an actuarially fair premium. This contract would pay all losses due to the fire. Assume that Rainie's contract is the only insurance contract Lemonade Insurance Company sold. What is the probability distribution of total losses for Lemonade Insurance Company if they sell a contract to Rainie? а. b. What is the actuarially fair premium [AFP] Lemonade Insurance Company will charge Rainie in the coming year? Show your work What is the amount of risk Lemonade Insurance Company faces if they have Rainie as their only customer? Show your work с.

Steven and Donna have been married for 35 years. Both are in great health, but they feel it is time that they start planning for their future health needs. Steven is 60 years old, and Donna is 61 years old. They have been approached by a long-term care insurance salesperson who is offering the following insurance product: . . . . Annual maximum benefit: $67,200 or 80% of annual cost, whichever is less. Daily maximum benefit: $187 or 80% of daily cost, whichever is less. Billing cycle: 360 days. Premium for policy with 180-day elimination period: $3,248. Premium for policy with 90-day elimination period: $3,696. Premium for policy with 30-day elimination period: $4,256. Steven and Donna are interested in possibly purchasing one of these policies. Use the following information to help them analyze which policy may be the best alternative, The current annual cost of a good nursing care facility in their area is $91,440, They have $28,000 saved in a money market savings account, $11,200 in…

For a lifetime life insurance purchased by someone aged 40, some of the following information is provided: • The death benefit is paid at the end of the year of death of $35000 if you die at age 20 year from first contract, $70000 if dies after 20 years of contract. • Premiums with the same amount are paid on average twice a year for a maximum of 20 years as long as they are alive. ä40 = 18,458 60= 14,904 ä50 = 17,025 ä(2) 40:201 = 19,628 ä(2)50:101 = 17,553 20E40 0,36663 10E50 0,60182 i = 0,05 Calculate the benefit reserve at time 10, that is 10V, using the prospective method! =

ABC enters into a contract to help DEF, a ramen restaurantto design a market strategy to compete with DEF. The contract spans twelve month. DEF will pay P80,000 at the beginning of each month. At the end of the contract, ABC either will give DEF a refund of P25,000 or will be entitled to an additional P15,000 bonus, depending on whether sales at DEF at year- end increased to a target level. At the inception of the contract , ABC estimates a 30% chance that it will not earn the bonus and calculates the contract price based on the expected value of future payments to be received. At the start of the fifth month, circumstances change and ABC revise the probability that it will earn the bonus to 80% What is the adjustment to the service revenue ?