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  3. Life Insurance Products Valuation in R

Exercise

Take it easy: a simple life insurance

Cynthia wants to help her friend Ethan who is studying for the Long-Term Actuarial Mathematics exam organized by the Society of Actuaries. She explains him a very simple life insurance product: a product sold to \((20)\) that pays 10,000 EUR at the end of the year of death if death occurs at a given age \(30\). The figure illustrates how you should value this life insurance coverage.

You can assume an interest rate \(i = 1\%\) and use the one-year survival probabilities px and mortality rates qx which have been preloaded.

Instructions

100 XP
  • Define kpx as the 10-year survival probability of (20).
  • Assign the 10-year deferred mortality probability of (20) to kqx.
  • Specify the discount factor that discounts a payment at the end of year 11 to the present moment at rate 1%.
  • Calculate the EPV of the simple life insurance product by multiplying the benefit of 10,000 EUR with discount_factor and kqx.