CAS Exam MAS-I Fall 2019, Question 11
Study guide: Exam MAS-I
A company with extensive experience is using the Illustrative Life Table (ILT) to price life insurance, but is considering switching to a Modified ILT.
The Modified ILT is identical to the original ILT for Ages beyond 25, but has adjustments for Ages 25 and prior.
The following is an excerpt from the adjusted section of the Modified ILT:
Age x |
l_x |
1000q_x |
\ddot{a}_x |
1000A_x |
|---|---|---|---|---|
| 20 | 9,617,802 | 1.34 | 16.5112 | 65.40 |
| 21 | 9,604,896 | 1.37 | 16.4640 | 68.08 |
| 22 | 9,591,695 | 1.10 | 16.4144 | 70.89 |
| 23 | 9,581,169 | 1.14 | 16.3572 | 74.12 |
| 24 | 9,570,288 | 0.86 | 16.2971 | 77.52 |
| 25 | 9,562,017 | 0.91 | 16.2290 | 81.38 |
This company only sells whole life policies of 10,000. Someone Age 23 is considering purchasing a whole life policy.
Calculate the change in annual level benefit premium the company charges this customer by using the Modified ILT instead of the original ILT.
- A) Less than -0.25
- B) At least -0.25, but less than 0.00
- C) At least 0.00, but less than 0.25
- D) At least 0.25, but less than 0.50
- E) At least 0.50
Answer this question and see the worked solution