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  3. Life Insurance Products Valuation in R

Exercise

Short- and long-term

Let's discover what happens to the present value of the guaranteed payment and the pure endowment of 10,000 EUR when you change the time horizon from 5 to 10 or 30 years. The interest rate is still constant at \(2\%\) and the survival probabilities px have been preloaded.

Instructions

100 XP
  • Assign the PVs of guaranteed payments of 10,000 EUR in 5, 10 and 30 years from now to PV. Use vectorization.
  • Calculate the survival probabilities kpx of (20) using cumprod() on the subset of px starting from 20 + 1 until length(px).
  • Use kpx at times c(5, 10, 30) to transform the PV of the guaranteed payments to the EPV of the corresponding pure endowments.