SOA Exam FAM Sample Question 6.6
Study guide: Exam FAM
For fully discrete whole life insurance policies of 10,000 issued on 600 lives with independent future lifetimes, each age 62, you are given:
(i) Mortality follows the Standard Ultimate Life Table
(ii) i = 0.05
(iii) Expenses of 5% of the first year gross premium are incurred at issue
(iv) Expenses of 5 per policy are incurred at the beginning of each policy year
(v) The gross premium is 103% of the net premium.
(vi) _{0}L is the aggregate present value of future loss at issue random variable
Calculate \Pr({}_{0}L < 40{,}000), using the normal approximation.
[A modified version of Question 15 on the Spring 2013 exam]
- A) 0.75
- B) 0.79
- C) 0.83
- D) 0.87
- E) 0.91
Answer this question and see the worked solution