AMAT 172

Problem Set 1
1. A fully continuous insurance issued to (x) pays a benet of 1 at the moment of death if death of (x)
within n years after issue. Otherwise, no benet is paid. Level benet premiums are paid for the
rst n years.
a. If
t
L is the prospective loss of the insurer t years after issue, write
t
L as a function of the future
lifetime of (x).
b. Find E[
t
L|T(x) > t]
2. From the prospective formula of benet reserve for a fully continuous n-year endowment insurance,
derive the (a) insurance-ratio, (b) annuity-ratio, and (c) premium-ratio formulas. Use one of (a), (b)
or (c) to compute for
5

V (

A
40:15|
) if l
x+t
= 100 x t where t < 100 x.
3. A whole life insurance pays 1000 at the end of the year of death of (10). Premiums are paid annually
to age 55. The net premium for the rst 15 years is 1000P
10
followed by for the next 30 years.
The following are given:
A
10
= 0.04 a
10
= 16 a
10:45|
= 15
A
25
= 0.08 a
10:15|
= 10 a
25:30|
= 12.78
Calculate and the fteenth-year terminal reserve.
4. For a fully continuous 10year deferred whole life insurance, the following are given:
i. = 0.05 and = 0.02
ii. The benet at time t is given by b
t
= 1000e
0.01(10t)
for t > 10.
iii. Level premiums are determined by the equivalence principle and are payable for life.
Determine all values of t for which the benet reserve is 0.
5. For a special fully discrete whole life insurance on (x), the death benet is 0 in the rst year and 5000
thereafter. Level benet premiums are payable for life. If q
x
= 0.05, v = 0.9, a = 5 and
10
V
x
= 0.20.
Calculate the benet reserve at the end of year 10 for this insurance.
6. A person is issued a fully discrete whole life insurance policy at age x. At age x +t, the probability
of that person dying within a year is Q. If
t
V
x
= 0.210,
t+1
V
x
= 0.229, a
x+t
= 11, calculate Q using
i = 0.05.
7. Assume that a 10-year endowment insurance of 1,000 is issued on a fully discrete basis to each
member of a group of l
30
persons at age 30. Trace the cashow expected for this group based on the
life table below with i = 0.06.
Age x l
x
d
x
Age x l
x
d
x
30 95,013.79 145.27 36 94,016.86 201.22
31 94,868.53 152.63 37 93,815.64 213.82
32 94,715.89 160.69 38 93,601.83 227.58
33 94,555.20 169.51 39 93,374.25 242.61
34 94,385.70 179.15 40 93,131.64 259.02
35 94,206.55 189.69 41 92,872.62 276.93
*END*