SOA Exam FAM Sample Question 6.23

Study guide: Exam FAM

For fully discrete 30-payment whole life insurance policies on $(x)$ , you are given:

(i) The following expenses payable at the beginning of the year:

	1st Year	Years 2 – 15	Years 16 – 30	Years 31 and after
Per policy	60	30	30	30
Percent of premium	80%	20%	10%	0%

(ii) $\ddot{a}_{x} = 15.3926$

(iii) $\ddot{a}_{x:\overline{15}|} = 10.1329$

(iv) $\ddot{a}_{x:\overline{30}|} = 14.0145$

(v) Annual gross premiums are calculated using the equivalence principle

(vi) The annual gross premium is expressed as $kF + h$ , where $F$ is the death benefit and $k$ and $h$ are constants for all $F$

Calculate $h$ .

[Question 11 on the Fall 2014 exam]

Concepts tested