Question 1: Calculate the life insurance gross premium for an insurance company, XYZ Life, under the following assumptions. Please round your answer to the nearest dollar. 1-year term insurance for a 35-year-old female The death benefit is $10,000 The probability of death within one year given a female is 35 years old (q30) is 0.015 The interest rate is 1.5% All deaths occur uniformly, hence for simplicity, price the product assuming all deaths happen at the middle of the year XYZ Life is looking for a 25% loading based on the pure premium (i.e. PV of expected loss) (Hint: When loading λP, expressed as a percentage, is based on pure premium, Gross premium = Pure premium × [1 λP]) Choose the correct answer from below. $155 $166 $171 $149 Correct! $186
Question 2: Fundamental purposes of the principle of indemnity include which of the following? I. To reduce physical hazards II. To prevent the insured from profiting from insurance neither I nor II Correct! II only I only both I and II Question The loss settlement under which of the following supports the principle of indemnity? life insurance replacement cost property insurance Correct!