CM1 Chapter 21 Question 11

Hello,

I just want some clarity on the above question.

My confusion is regarding the £1000 Claim Expenses on Death. Now in the question it states that the benefit is payable immediately on death so I've taken this to mean the claim expenses are also paid immediately on death and in my answer have approximated by multiplying it by (1+i)^(1/2). However in the solution it doesn't do this, it just calculates it on the basis that the claim expense would be paid at the end of the year of death. Can you please explain why the difference in approach for the claims expense as opposed to the benefit. I feel like they should both be calculated on the same basis?

Many thanks for your help

 

You're correct here - the expense should be paid immediately on death in this case and not at the end of the year of death. Thank you for pointing this mistake out!

We'll issue a correction document on the ActEd website shortly.