A single premium 25-year deferred annuity-due with unit annual benefit is issued to (40). The applicable...

  

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A single premium 25-year deferred annuity-due with unit annual benefit is issued to (40). The applicable survival model is uniform with w=100. The interest rate is i = 0.05. The single premium is refunded with interest 5% and the end of the year of failure if failure occurs during the deferred premium. Find the value of the reserve at time 20. Notation: Contract designations appearing to the right of the symbols for the future loss random variable at time t, L, and the policy value at time t, V, indicate that the corre- sponding quantities are defined assuming the unit benefit amount and that the premium is equal to the net level premium. For example, L₂=Zzt-PŸt VA-Pärt-¹ a+tin- where PP, and <1, where P P etc. A single premium 25-year deferred annuity-due with unit annual benefit is issued to (40). The applicable survival model is uniform with w=100. The interest rate is i = 0.05. The single premium is refunded with interest 5% and the end of the year of failure if failure occurs during the deferred premium. Find the value of the reserve at time 20. Notation: Contract designations appearing to the right of the symbols for the future loss random variable at time t, L, and the policy value at time t, V, indicate that the corre- sponding quantities are defined assuming the unit benefit amount and that the premium is equal to the net level premium. For example, L₂=Zzt-PŸt VA-Pärt-¹ a+tin- where PP, and <1, where P P etc.

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ANS WER The reserve at time 20 is 6 012 WORK ING WITH EX PL AN ATION We are looking for the reserve at time 20 so we need to find the expected value o... View the full answer