What should the rate of premium payment be on each policy

Reference no: EM131001575

1. A whole-life insurance contract provides for 1 unit payable at the moment of death. Level premiums are payable continuously for life at the annual rate of 0.08. The force of mortality is a constant 0.05, and the force of interest is a constant 0.10. How many contracts must be sold in order that there is at least a 95% chance that the total premiums on all these contracts will cover the total benefits? Use a normal approximation.

2. An insurer sells 100 whole-life insurance policies each providing for 1 unit payable at the moment of death. Level premiums are payable continuously for life. The force of interest is a constant 0.06, and the force of mortality is a constant 0.04. What should the rate of premium payment be on each policy, in order that there is a 95% chance that total premiums on all 100 policies will cover the total benefits on all policies? Use a normal approximation.

Reference no: EM131001575

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