Elementary Life Contingencies

(part 6)
22/09/2011

..

Establishing a link between Ax and ax

1 vn
an =
d
..

..
E v K x +1 = 1 d .E aK +1
x

..

Ax = 1 d . a x

..

ax =

1 Ax
d

Exercise
Prove that:

..

Ax:n = 1 d . a x:n

Example 1
If 10p30 = 0,940 and 10p40 = 0,910 then the probability
that a person aged 30 will die between ages 40 and
50 is:
A.
0,085
C.
0,145
B.
0,090
D.
0,150

Example 2
If at interest rate i,
If,
i Ax = 0,3812
0 3812 and Px = 0,02091
0 02091
then i is:
A.
4%
C. 3,4%
B.
3,5%
D. 3%

Example 3
A life insurance company sells an endowment
assurance product that operates as follows:
premiums are payable
p y
annually
y in advance,,
Level p
while the policyholder is alive, for the full term of the
policy.
If the policyholder dies during the term of the policy,
a lump sum death benefit is payable at the end of the
year of death.
If the policyholder survives to the end of the term of
the policy, a lump sum survival benefit equal to the
total premiums paid under the policy (without any
interest added) is payable immediately.

The relevant details for one new policy of this type are
as follows:

Age of policyholder:
Term of policy:
Death benefit:
Interest basis:
Mortality basis:

55
2 years
R 850 000
7% p.a.
A1967-70 (ultimate)

Calculate the net annual premium for this policy.

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