Assignment X4 - Question 4.4

Hi,

This is my first post to this forum.

Relating to the above question, I don't understand how a worsening of mortality by 5% would increase:
Term assurance reserves by almost 5% &
Endowment assurance reserves by 0.5% and

the 1% improvement of mortality of annuity business would increase its reserves by 5-10%.

How do we get these numbers?

Can any one help?

 

Sol:

In term assurance reserves ,we reserve only for Mortality unless otherwise if any return of premium or surrender benefit is there so your reserves are purely dependent on mortality ,where as in endowment assurance Policy reserves will be hight because of Endowment benefit so your payment is certain but because of increased mortality you are paying benefit early rather on maturity date.
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