SOA Exam FAM Sample Question 6.55

Study guide: Exam FAM

An insurer issues a special 20 payment insurance policy on (45) with the following benefits:

A death benefit of 1000, payable at the end of year of death, provided death occurs before age 65; and
An annuity benefit that pays 2500 at the start of each year, starting at age 65

You are given:

i) Level annual premiums of $P$ are paid at the beginning of each year

ii) Premiums are calculated based on the equivalence principle

iii) Mortality follows the Standard Ultimate Life Table

iv) $i = 0.05$

Calculate $P$ .

[Question on October 2022 FAM-L Exam]

Concepts tested