SOA Exam FAM Sample Question 6.17
Study guide: Exam FAM
An insurance company sells special fully discrete two-year endowment insurance policies to smokers (S) and non-smokers (NS) age x. You are given:
(i) The death benefit is 100,000; the maturity benefit is 30,000
(ii) The level annual premium for non-smoker policies is determined by the equivalence principle
(iii) The annual premium for smoker policies is twice the non-smoker annual premium
(iv) \mu^{\text{NS}}_{x+t} = 0.1, \ t > 0
(v) q^{\text{S}}_{x+k} = 1.5\,q^{\text{NS}}_{x+k} for k = 0, 1
(vi) i = 0.08
Calculate the expected present value of the loss at issue random variable on a smoker policy.
[Question 18 on the Spring 2013 exam]
- A) –30,000
- B) –29,000
- C) –28.000 (as printed)
- D) –27.000 (as printed)
- E) –26.000 (as printed)
Answer this question and see the worked solution