SOA Exam FAM Sample Question 6.3
Study guide: Exam FAM
S, now age 65, purchased a 20-year deferred whole life annuity-due of 1 per year at age 45. You are given:
(i) Equal annual premiums, determined using the equivalence principle, were paid at the beginning of each year during the deferral period
(ii) Mortality at ages 65 and older follows the Standard Ultimate Life Table
(iii) i = 0.05
(iv) Y is the present value random variable at age 65 for S's annuity benefits
Calculate the probability that Y is less than the actuarial accumulated value of S's premiums.
[A modified version of Question 20 on the Fall 2012 exam]
- A) 0.35
- B) 0.37
- C) 0.39
- D) 0.41
- E) 0.43
Answer this question and see the worked solution