The Endeavour insurance company issues life annuities. It prices its annuities using the following probabilities. Survival...

Transcribed Image Text:

The Endeavour insurance company issues life annuities. It prices its annuities using the following probabilities. Survival probabilities Year Probability of surviving from start of year to end of year 1 2 0.89 0.68 0.57 3 40 The annuities pay $60 000 at the end of each year while the policyholder is alive. Endeavour insurance believes it can earn 4% p.a. interest on investments. It also has to provide for initial expenses of $50 at the date of issue. (c) Calculate the fair single premium value which is paid on the issue date of this policy. Round your answer to two decimal places. The Endeavour insurance company issues life annuities. It prices its annuities using the following probabilities. Survival probabilities Year Probability of surviving from start of year to end of year 1 2 0.89 0.68 0.57 3 40 The annuities pay $60 000 at the end of each year while the policyholder is alive. Endeavour insurance believes it can earn 4% p.a. interest on investments. It also has to provide for initial expenses of $50 at the date of issue. (c) Calculate the fair single premium value which is paid on the issue date of this policy. Round your answer to two decimal places.

Answer rating: 100% (QA)

To calculate the fair single premium value we need to first calculate the expected present value of ... View the full answer