Differentiate between initial and termination expenses, Finance Basics

Assignment Help:

(a) State the most appropriate drivers for the following direct expenses:

(i) New business administration department's salary costs
(ii) Medical examinations for temporary life policies
(iii) Commission payment to direct salesman

(b) Differentiate between initial, renewal and termination expenses.

(c) Mr Howcome, aged 45, buys a whole life assurance policy with a death bene?t of $ 30,000, payable at the end of the year of death. Using AM92 Ultimate Mortality with 4% pa interest, calculate the gross premium payable by Mr Howcome annually in advances for 15 years, allowing for the following expenses:

Initial expenses of $ 278 plus 65% of the annual premium, renewal expenses of $ 70 (incurred throughout life from year 2 onwards) plus 5% of the annual premium (incurred at the time of payment of each premium from year 2 onwards) and claim expenses of 3.5% of sum insured.

(d) Kevin, aged 35, takes out a whole life insurance policy with a death bene?t of $ 50,000, payable at the end of the year of death. If Kevin dies within the next 20 years the policy will pay out $ 10,000 pa from the policy anniversary following his death with the last payment being made on the 20th policy anniversary. Considering the following expenses; (Initial) $ 750 at outset, (Renewal) 4% of each premium on collection and (Termination) $ 500 at the time of his death should this occur in the ?rst 20 years plus 0.5% of the sum insured on payment, calculate the half yearly premium payable throughout Kevin's future lifetime under the AM92 Select Mortality with 4% pa interest.


Related Discussions:- Differentiate between initial and termination expenses

Baumol's model - optimal cash balance, Baumol's Model - Optimal Cash Balanc...

Baumol's Model - Optimal Cash Balance An application of the EOQ is the Baumol's model which is inventory model to cash management. Its statements are as: The firm emplo

Types of stock markets, Types of Stock Markets 1. Over the Counter or...

Types of Stock Markets 1. Over the Counter or OTC and Organised Exchange market This is whereas the selling and buying of securities is done through sellers and buyers ar

Mony and finance, mony is differnt from wealth and income

mony is differnt from wealth and income

Running own small businesss, how to do basic accountancy and what can i cla...

how to do basic accountancy and what can i claim back

Comparison a competing firm-analysts earnings estimates, Comparison to a Co...

Comparison to a Competing Firm In Mergent Horizon, return to the competitor page, but now enter the list of competitors "As Defined by the Company."  From this list select a f

Fixed assets or sales ratio, Last year Nymphe Technologies had $450 million...

Last year Nymphe Technologies had $450 million of sales and $270 million of fixed assets, so its FA/Sales ratio was 60%.  However, its fixed assets were used at only 75% of capacit

Cost of financial distress, Assume a levered firm has a current value of $6...

Assume a levered firm has a current value of $650,000,000. The firm currently has $259,258,527.20 in debt. Without debt, firm value (i.e. VU) would be $580,000,000. Ignore the cost

Explain the meaning of gross and net yield, Explain the meaning of Gross an...

Explain the meaning of Gross and Net Yield While gross yield refers to the yield realized by investor before paying taxes, net yield is what remains with him after paying th

Restrictive bond or debt covenant, Restrictive Bond or Debt Covenant I...

Restrictive Bond or Debt Covenant In this case the debenture holders will impose strict conditions and terms on the borrower. These restrictions may comprise: a) No disposal

Terms used in capital market authority, Terms used in Capital Market Author...

Terms used in Capital Market Authority 1. ACCOUNTS fourteen (14) days durations into that the stock exchange trading calendar is divided. 2. ACCOUNTS DAY - Sixth or sev

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd