Hi, Quick question regarding the solution to the example above. The solution reads: "The reserve required at the end of the year for each surviving policy plus the annuity payment due at that time is: 10,000a61 + 10,000" I agree with this, however it then equates this to " =10,000 x 16.311 = £163,000 " My question is, where does the +10,000 (which I assume is the annuity payment due) go? 16.311 is the correct a61 annuity factor, so it has not been incorporated into that number. So the equality does not appear to hold. Many thanks, Jooser
Where does the £10,000 go? The 16.311 figure is an annuity paid in advance. The only difference between a whole life annuity paid in advance and a whole life annuity paid in arrears is the first payment of £10,000 - so it doesn't go. 15.311 X 10,000 + 10,000 = 16.311 X 10,000 Good luck! John
