Chapter22 Costing guarantees & Options

[Genesiss]

This chapter is frustrating!

Qn1:How can one tell from the question which of Conventional or North American methods to use? Example 2 & the example immediately after the core reading on the conventional method have confused me.

Qn2: Example 1....can someone please shed light on the formula for EPV(Benefits) and EPV(premiums)...why is the option being valued as a term assurance?This seems to run through all the examples...is it the only/easier way or am I missing something???

Qn3:Example 2 which shows the P(option) of 321.24....I do not understand though I can see it being combined with the basic premium somewhere in the calculation for those lives taking the option?. Also how is this different from the extra premium being computed??

HEEEEEEEEEEELLLLLLLLLLLLPPPPPPPPPPPPPPPPP!!!

 

[Genesiss]

I think I have an idea on the claculation of EPV(Benefits) for example 2 concentional method. However just to check my understanding, here goes.
the policyholder has an option to increase to 200,000 the DEATH benefit sum assured from year 5. the last term of that equation shows something like;

100,000 {A x:n + 100,000 A x:n}. so the policyholder has the usual 100,000 from the original policy and adds an additional 100,000 on the death benefit (whch is valued as a term assurance).
is there a better way fo capturing the total benefit using actuarial notation?