SOA Exam FAM Sample Question 7.10
Study guide: Exam FAM
For a fully discrete whole life insurance of 100,000 on (45), you are given:
(i) Mortality follows the Standard Ultimate Life Table
(ii) i = 0.05
(iii) Commission expenses are 60% of the first year's gross premium and 2% of renewal gross premiums
(iv) Administrative expenses are 500 in the first year and 50 in each renewal year
(v) All expenses are payable at the start of the year
(vi) The gross premium, calculated using the equivalence principle, is 977.60
Calculate _{5}V^{e}, the expense policy value at the end of year 5 for this insurance.
[A modified version of Question 8 on the Fall 2013 exam]
- A) –1070
- B) –1020
- C) –970
- D) –920
- E) –870
Answer this question and see the worked solution