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© 2014 Pacific Crest
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Make sure you understand the model!
Using the Period Life Table for 2009 (available on the companion website),
calculate likelihood of surviving from:
age 40 to 50
age 40 to 60
age 40 to 70
C
ritical Thinking Questions
Developing your understanding
1. What is the annual premium of a $500,000 30-year term insurance policy for a male who is 40 years
of age? If the insured policy holder survives the 30 years, what is the total investment cost? What is
the proceeds to the insurance company if the insured policy holder survives?
2. Why does the insurance company have different premiums for a given age, length of term, gender,
and six health categories?
3. What is the experiment that the insurance company used to determine the premium for the term
policies?
4. For a 30-year term policy, how many outcomes are possible in the sample space in the experiment?
3.1 Likelihood