Under a system of level premiums for life insurance which of...

Under a system of level premiums for life insurance, which of the following is true: the policyholder overpays for insurance protection during the early years the policyholder underpays for insurance protection during the early years the policyholder neither overpays nor underpays for insurance during the early years none of the above

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Transcript

00:01 First we need to find the present value of the debt benefit and the present value of the premiums for each policy.

00:05 So we will use the following notation.

00:06 So here capital ax, ax represent the present value of a whole life insurance.

00:12 So here ax represents the present value of a whole life insurance.

00:18 Present value of a whole life insurance.

00:22 Whole life insurance.

00:26 Ax is the present value of a one year term life insurance of one unit issued to a life aged x.

00:31 Ax represent the present value of a whole life annuity of one unit per year issued to a life aged x.

00:38 Ax is the present value of a one year term life annuity of one unit per year issued to a life aged.

00:44 I represent the interest rate and v represent the discount factor, v is equal to 1 by 1 plus i.

00:49 And after that lx represents the number of life aged x and dx represents the number of deaths between ages x and x plus 1.

00:54 So here the first question is, five year term life insurance with a five year term life insurance with some insurance of 25 ,000 per male.

01:03 So here nlp is equal to 50 is to 5 divided by 25 ,000 dollars.

01:22 And after that and for the second one and for the and for the second one five year term life insurance with some insurance 25 ,000 for male non -smoker...

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