Find the initial premium of the life annuity

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Reference no: EM131001001

A deferred life annuity on (60) provides for annuity benefits payable for 3 years, beginning at age 63, provided that (60) is alive. The first annuity payment is 1000, the second is 2000 and the third is 3000. Premiums are payable for 3 years, beginning at age 60. The second and third premiums are equal in amount and each double the amount of the initial premium. If (60) dies before age 63, there will be, at the end of the year of death, a return of all premiums paid prior to death, without interest. You are given that q₆₀ = 0.1, q₆₁ = 0.2, q₆₂ = 0.25, q₆₃ = 0.3, q₆₄ = 0.4. The interest rates are 25% per year for the first 4 years, and 50% for the fifth year. Find (a) the initial premium, (b) 1V and (c) 4V.

Reference no: EM131001001

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