Assuming a maximum age of 108 (N = 43) and 4% interest, a life insurer calculating with mortality statistics requires €105,513 capital to pay for a €10,000 annuity for life, for a 65-year old male. For a 65-year old female, this would be €126,698.

The difference is explained by the expected longer longevity of females:1) How much should a 25-year old female pay to receive €10,000 p.a. starting at 65, for as long as she lives (without mortality)? Hint: calculate an Annuity Due.2) The life insurer is using mortality statistics and knows that out of 10,000,000 new-born, 9,936,640 are alive at 25, 9,662,170 at 50 and 8,861,300 at 65-years.
3) How much should a 25-year old female pay to receive €10,000 p.a. starting at 65, as long as she is alive (with mortality)?

Answer rating: 100% (QA)

To calculate the amount a 25yearold female should pay to receive 10000 pa starting at 65 for as long as she lives we need to calculate an annuity due An annuity due is an annuity payment made at the b... View the full answer