A Universal Life policy is sold to a 35-year old woman. The initial premium is $3500...
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A Universal Life policy is sold to a 35-year old woman. The initial premium is $3500 and the face amount is $200,000. The policy provides a death benefit of the face amount plus the account value i.e. an increasing death benefit policy. The cost of insurance rates is equivalent to the Stats Canada 2009-2011 - Canada female rates and the effective rate of interest used for discounting COI amounts is 6%. The expense charges are 5% of the premium plus $65. Surrender charges decrease over time and never exceed the account value. The surrender charge schedule is as follows: Policy year 1 Surrender $5000 Charge 2 $4500 3-5 $4000 6-10 $2500 11-15 $1000 16+ 0 Assume the policy remains inforce for 15 years, the credited interest rate is 6%, all cash flows occur at policy anniversaries. Project the account value and the cash value at each year end for the 15-year projected term, given that the policyholder pays a premium of $3500 for 5 years then stops paying premiums. A Universal Life policy is sold to a 35-year old woman. The initial premium is $3500 and the face amount is $200,000. The policy provides a death benefit of the face amount plus the account value i.e. an increasing death benefit policy. The cost of insurance rates is equivalent to the Stats Canada 2009-2011 - Canada female rates and the effective rate of interest used for discounting COI amounts is 6%. The expense charges are 5% of the premium plus $65. Surrender charges decrease over time and never exceed the account value. The surrender charge schedule is as follows: Policy year 1 Surrender $5000 Charge 2 $4500 3-5 $4000 6-10 $2500 11-15 $1000 16+ 0 Assume the policy remains inforce for 15 years, the credited interest rate is 6%, all cash flows occur at policy anniversaries. Project the account value and the cash value at each year end for the 15-year projected term, given that the policyholder pays a premium of $3500 for 5 years then stops paying premiums.
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