f) A life insurance company issues 20-year temporary assurance policies to lives aged...
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f A life insurance company issues year temporary assurance policies to lives aged The sum assured, which is payable immediately on death, is Ksh for the first years, and Ksh thereafter. Level annual premiums are payable in advance for years, or until earlier death. The premium basis is: Mortality AM Ultimate. Interest: pa and no expenses. i Calculate the annual premium. ii Find the net premium reserve ten years after the commencement of the policy, immediately before the payment of the eleventh premium, assuming the reserving basis is the same as the premium basis. iii Give an explanation of your numerical answer to part ii Describe the disadvantages to the insurance company of issuing this policy. iv How could the terms of the policy be altered, so as to remove the disadvantages described in part iii 
f A life insurance company issues year temporary assurance policies to lives
aged The sum assured, which is payable immediately on death, is Ksh
for the first years, and Ksh thereafter. Level annual
premiums are payable in advance for years, or until earlier death. The
premium basis is: Mortality AM Ultimate. Interest: pa and no
expenses.
i Calculate the annual premium.
ii Find the net premium reserve ten years after the commencement
of the policy, immediately before the payment of the eleventh
premium, assuming the reserving basis is the same as the
premium basis.
iii Give an explanation of your numerical answer to part ii
Describe the disadvantages to the insurance company of issuing
this policy.
iv How could the terms of the policy be altered, so as to remove the
disadvantages described in part iii
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