SOA Exam FAM Sample Question 6.2

Study guide: Exam FAM

For a fully discrete 10-year term life insurance policy on $(x)$ , you are given:

(i) Death benefits are 100,000 plus the return of all gross premiums paid without interest

(ii) Expenses are 50% of the first year's gross premium, 5% of renewal gross premiums and 200 per policy expenses each year

(iii) Expenses are payable at the beginning of the year

(iv) $A^{1}_{x:\overline{10}|} = 0.17094$

(v) $(IA)^{1}_{x:\overline{10}|} = 0.96728$

(vi) $\ddot{a}_{x:\overline{10}|} = 6.8865$

Calculate the gross premium using the equivalence principle.

[Question 25 on the Fall 2012 exam]

Concepts tested