Q&A bank part 2

InQ&A bank part2, Question no. 2.27
In solution of this question why we take term 1.06^(1/2)/1.0192308 in the EPV of benefits.
according to my approch:
if death occur during the first year ,PV of benefit at the end of first year is sum assured plus reversionary bonuses(i.e 20000*1.0192308*v).if death occur during the second year,PV of the benefit at the end of second year is
(20000*1.0192308^2*v^2). and so on ......
i.e
PV of the benefit =20000*1.0192308^(k+1)*v^(k+1) IF Kx<20
= 20000*1.0192308^20*v^20 IF Kx>=20
EPV of the benefit
=sigma (20000*1.0192308^(k+1)*v^(k+1)*kdeferred qx
+20000*1.0192308^20*v^20*20p[40]
=20000*A[40]:20(1 is on the right side of A top i.e term assurance@j% +20000*v^20*20p[40] @j%
WHERE j=1.06/1.0192308-1=4%

so no need the term 1.06^(1/2)/1.0192308.

anyone clarify this point and tell me ,is my approch is right?
thanks,
neetu

 

Bonus vesting at the end of the year

Question speaks of paying death benefit immediately on death - this gets you 1.06^1/2 in numerator for term assurance part to descretize...

Question also speaks of bonus vesting at the end of the policy year. So, there will not be any bonus for deaths during first year. So, for deaths during first year, the payment at the end of year-1 would be just 20000 * v. So you have 1.0192308 in denominator in the outside term facilitating you to calculate term assurance part using revised interest rate.

Pls let me know if this clarifies...

Thanks,
Raj

 

Oh! yah,u r right.........
actually ,I escape the term "immediately on death" when read the question & make silly mistake.
now it's very clear.
thanks for help
neetu