Actuarial maths 1)?

Question

Assume 4% interest, ignore expenses and (where appropriate) use the approximation for the

whole life annuities due paid p-thly or continuously derived in lectures. assume select values from the A1967-70 tables. Give your numerical answers to the nearest

penny.

1 (a). A man on retirement on his 65th birthday receives a lump sum of £100, 000 which he uses to purchase a pension which will be paid monthly in advance. Find the monthly

pension he receives.

(b) John Doe takes out a whole-life assurance on his 50th birthday with a sum assured of£20,000. Find the annual premium for this assurance if premiums are to start immediately and to be paid on each birthday.

(c) Suppose that the John Dow actually died at the age of 60, so that the death benefit was paid on (what would have been) his 61st birthday. Calculate the actual loss made by the

life assurance company on John Doe’s policy at the time when the benefit was paid.

Answer 1

Yikes! Too far removed from the classroom to answer this question. That was so long ago. In the real world no one makes these kinds of calculations without the use of a computer program.