SOA Exam FAM Sample Question 4.2

Study guide: Exam FAM

For a special 2-year term insurance policy on $(x)$ , you are given:

(i) Death benefits are payable at the end of the half-year of death

(ii) The amount of the death benefit is 300,000 for the first half-year and increases by 30,000 per half-year thereafter

(iii) $q_{x} = 0.16$ and $q_{x+1} = 0.23$

(iv) $i^{(2)} = 0.18$

(v) Deaths are assumed to follow a constant force of mortality between integral ages

(vi) $Z$ is the present value random variable for this insurance

Calculate $\Pr(Z > 277{,}000)$ .

[Question 15 on the Fall 2012 exam]

Concepts tested