You are given the following information about a person aged exactly x: 9x = 0.01, 9x+1...

 

Transcribed Image Text:

You are given the following information about a person aged exactly x: 9x = 0.01, 9x+1 = 0.02, 9x+2 = 0.03 A Term Life Insurance contract with death benefit of 50,000 is set on this life, with a coverage period of n = 3 years. What is the Expected Present Value of the death benefit, if the annual effective interest rate is 7%? [As usual, a benefit is paid at the end of the year of death, if death occurs within the coverage period.] You are given the following information about a person aged exactly x: 9x = 0.01, 9x+1 = 0.02, 9x+2 = 0.03 A Term Life Insurance contract with death benefit of 50,000 is set on this life, with a coverage period of n = 3 years. What is the Expected Present Value of the death benefit, if the annual effective interest rate is 7%? [As usual, a benefit is paid at the end of the year of death, if death occurs within the coverage period.]

Answer rating: 100% (QA)

To calculate the expected present value of the death benefit we need to consider the probabilities o... View the full answer