(20 points) An insurer issues a whole-life policy to a policy holder, who is select...
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(20 points) An insurer issues a whole-life policy to a policy holder, who is select at age 40. The sum insured is 500,000, payable at the end of the year of death. Premiums of P are payable annually in advance, as long as the policy holder is alive. Assuming 900 identical and independent contracts, standard select survival model and i = 0.05 calculate the premium using the Portfolio Percentile Premium Principle, with overall profit probability of a = 0.96. (HINT: Note that $(1.75) = 0.96.) (20 points) An insurer issues a whole-life policy to a policy holder, who is select at age 40. The sum insured is 500,000, payable at the end of the year of death. Premiums of P are payable annually in advance, as long as the policy holder is alive. Assuming 900 identical and independent contracts, standard select survival model and i = 0.05 calculate the premium using the Portfolio Percentile Premium Principle, with overall profit probability of a = 0.96. (HINT: Note that $(1.75) = 0.96.)
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