The Durham Insurance Company sells a 5-year term insurance policy with a face value of $100,000 to a 47-year-old man for a monthly premium of $63. The
mortality table is given below.
Age at Death
47
48
49
50
51
Age ≥ 52
Mortality Rate
0.0032
0.0034
0.0038
0.0043
0.0049
a. Find the value of x from the table.
b. A man buys a policy on his 47th birthday. He dies after making 15 payments. What is the total dollar value of the payments he made?
c. How much do this man's beneficiaries receive upon his death?
d. What is the Insurance company's profit on this policy?
e. If 8,000 men aged 47 each bought one of these policies, on average, how many would die at age 50? Round to the nearest integer.
f. What is the annual premium for this policy?
g. Assume a policyholder pays the premium annually. What is the profit of this policy for each year of death?
Death at 47:
Death at 48:
Death at 49:
Death at 50:
Death at 51:
Death after 51:
h. What is the expected profit from selling one of these policies? Round to the nearest cent.
1. What is the expected profit from selling 8,000 of these policies?
