Ask Question
6 August, 04:16

A fully discrete whole life insurance policy paying $50,000 at the end of the year of death is issued to an individual age 36. The net premium reserve at the end of 10 years is $8,000. The net premium for this policy is $900 and the net premium for an identical policy issued to an individual age 46 is P. The effective annual interest rate of interest is 6%. Determine P.

+2
Answers (1)
  1. 6 August, 04:32
    0
    Our P = 17540 $

    Explanation:

    Amount of Insurance Policy = 50000$

    premium reserve at 10th Year = 8000$

    Net Premium for the policy = 900$

    Annual Interest Rate = 6%

    Net Premium at the age of 46 = ?

    900 * 10 years = 9000$

    9000 + Interest rate @ 6% = 9540$

    Net Premium + Premium reserve of 10 Years = 9540 + 8000 = 17540$

    P = 17540 $

    Note: As similar policy have interest rate @ 6%, which is paid every year,

    At the age of 46, Net premium reserved amount also will be recovered.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “A fully discrete whole life insurance policy paying $50,000 at the end of the year of death is issued to an individual age 36. The net ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers