SOA Exam FAM Sample Question 6.43
Study guide: Exam FAM
For a fully discrete, 5-payment 10-year term insurance of 200,000 on (30), you are given:
(i) Mortality follows the Standard Ultimate Life Table
(ii) The following expenses are incurred at the beginning of each respective year:
| Year 1 | Years 2 - 10 | |||
|---|---|---|---|---|
| Percent of Premium | Per Policy | Percent of Premium | Per Policy | |
| Taxes | 5% | 0 | 5% | 0 |
| Commissions | 30% | 0 | 10% | 0 |
| Maintenance | 0% | 8 | 0% | 4 |
(iii) i = 0.05
(iv) \ddot{a}_{30:\overline{5}|} = 4.5431
Calculate the annual gross premium using the equivalence principle.
[A modified version of Question 11 on the Fall 2016 exam]
- A) 150
- B) 160
- C) 170
- D) 180
- E) 190
Answer this question and see the worked solution