FAML Practice Test

1Single Choice

A whole-life insurance policy with face amount 100,000 is issued to a life aged 40. Using a constant interest rate of i = 0.05, the present value random variable of the benefit is Z. Which expression correctly represents Z?

A.Z = 100,000 * v^(K+1) where K is the curtate-future-lifetime random variable
B.Z = 100,000 * v^(K) where K is the complete-future-lifetime random variable
C.Z = 100,000 * v^(T) where T is the curtate-future-lifetime random variable
D.Z = 100,000 * v^(K) where K is the curtate-future-lifetime random variable

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