SOA Exam FAM Sample Question 6.30

Study guide: Exam FAM

For a fully discrete whole life insurance of 100 on $(x)$ , you are given:

(i) The first year expense is 10% of the gross annual premium

(ii) Expenses in subsequent years are 5% of the gross annual premium

(iii) The gross premium calculated using the equivalence principle is 2.338

(iv) $i = 0.04$

(v) $\ddot{a}_{x} = 16.50$

(vi) ${}^{2}A_{x} = 0.17$

Calculate the variance of the loss at issue random variable.

[Question 8 on the Fall 2015 exam]

Concepts tested