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Chapter 21 pge 10 Numerical

M

Muskan Hamirwasia

Keen member
The numerical on page 10 calculates surrender value where the assurance calculation is done using a multiple of 1.02. Can you please help in understanding where this multiple of 1.02 is coming from?
 
Muskan Hamirwasia said:
The numerical on page 10 calculates surrender value where the assurance calculation is done using a multiple of 1.02. Can you please help in understanding where this multiple of 1.02 is coming from?
Click to expand...
Hi Muskan

The sum assured is paid immediately on death. so we need to bring the payments forward by on average half a year (as the A function assumes benefits payable at the end of the year). We could do this by multiplying by 1.04^0.5 which is approximately 1.02.

Best wishes

Mark
 
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