A 30-year old select life is wishing to purchase a 35-year endowment assurance product with the following benefit types:

A 30-year old select life is wishing to purchase a 35-year endowment assurance product with the following benefit types:

• A death benefit of $250,000 paid at the end of the year of death if death occurs before the age of 50.
• From the ages of 50 to 65 the death benefit is $400,000 which is paid at the end of the year of death.
• The survival benefit is $500,000.
• Premium for this policy is to be paid in advance at the start of each year, as long as the
• policyholder is alive, up to a maximum of 30 years. Premium basis:
• Assume select mortality
• Interest rate is assumed to be 5% p.a. effective
• Initial Expense of $650 and 50% of the first premium.
• Renewal expense of 1% each renewal premium
• Death benefit claim expense of $50

a. Evaluate the annual premium to be charged for this policy?

b. What is the gross premium policy value for this policy at the end of the 15th year of the policy?

Policy Value basis:

• Assume non-select mortality
• Interest rate is assumed to be 4% p.a. effective
• Expenses are same as the Premium basis