For a special fully discrete 3year term insurance on a life

For a special fully discrete 3-year term insurance on a life age x:

1. Level benefit premiums are paid at the beginning of each year.

2. The death benefits in policy years 1, 2 and 3 are 200000, 150000, and 100000.

3. q_x = 0.03, q_x+1 = 0.06, and q_x+2 = 0.09

4. i = 0.06

Calculate (a) the benefit premium and (b) the initial benefit reserve at the beginning of the second year. (Ans 7452.55; 9411.01)

Solution