You are an actuary for a life insurance company that issues 20-year term life insurance policies with a death benefit of $500,000. The company has sold 10,000 policies with a total face amount of $5 billion. The company uses the following assumptions in its policy valuation:

• The probability of a policyholder dying in any given year follows a uniform distribution between ages 30 and 50.
• The expected annual interest rate on the company's investments is 4%.

Calculate the actuarial present value (APV) of the expected future death benefits.

(20 marks)

Answer rating: 100% (QA)

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