SOA Exam FAM Sample Question 6.28
Study guide: Exam FAM
For a fully discrete 5-payment whole life insurance of 1000 on (40), you are given:
(i) Expenses incurred at the beginning of the first five policy years are as follows:
| Year 1 | Years 2-5 | |||
|---|---|---|---|---|
| Percent of premium | Per policy | Percent of premium | Per policy | |
| Sales Commissions | 20% | 0 | 5% | 0 |
| Policy Maintenance | 0% | 10 | 0% | 5 |
(ii) No expenses are incurred after Year 5
(iii) Mortality follows the Standard Ultimate Life Table
(iv) i = 0.05
Calculate the gross premium using the equivalence principle.
[A modified version of Question 12 on the Spring 2015 exam]
- A) 31
- B) 36
- C) 41
- D) 46
- E) 51
Answer this question and see the worked solution