An insurance company is considering the introduction of an investment-only product that provides a claim based on
Question:
An insurance company is considering the introduction of an investment-only product that provides a claim based on the accumulated value of premiums paid by a policyholder. Policyholders would pay annual premiums of X at Year 0, 1, 2, ..., n -1 and would receive a claim equal to the accumulated value of the premium payments at Year n . Unless told otherwise, for the following questions use an interest rate of 4% per annum and assume that n=25. Assume also that, for the moment, and until told otherwise, policyholders do not die during the 25 year policy period.
Question 1
A policyholder is wishing to receive a claim payment of $300,000. Calculate the value of the premium payment X , that will provide this claim payment.
Systems analysis and design
ISBN: 978-0136089162
8th Edition
Authors: kenneth e. kendall, julie e. kendall