SOA Exam FAM Sample Question 7.20
Study guide: Exam FAM
For a fully discrete whole life insurance of 1000 on (35), you are given:
(i) First year expenses are 30% of the gross premium plus 300
(ii) Renewal expenses are 4% of the gross premium plus 30
(iii) All expenses are incurred at the beginning of the policy year
(iv) Gross premiums are calculated using the equivalence principle
(v) The gross premium policy value at the end of the first policy year is R
(vi) Using the Full Preliminary Term Method, the modified net premium reserve at the end of the first policy year is S
(vii) Mortality follows the Standard Ultimate Life Table
(viii) i = 0.05
Calculate R - S.
[A modified version of Question 15 on the Fall 2015 exam]
- A) -280
- B) -140
- C) 0
- D) 140
- E) 280
Answer this question and see the worked solution