1.

A single premium 10-year term life insurance policy with benefits payable at the end of the year
of death is issued to (30). You are given:
(i) Mortality follows the Illustrative Life Table.
(ii) i = 0.06
(iii) Sales commissions are 18% of expenses-loaded premium
(iv) Taxes are 2% of expense-loaded premium
(v) Per policy expenses
First year = 40
Renewal = 5 per year
Calculate the policy fee that should be charged.
A. 9.00

B. 11.90

C. 73.75

D. 79.30

E. 92.15

2. For a life table with a one-year select period, you are given:

x ![x] d[x] !x+1 e[x]

80 1000 90
- 8.5
(i)
81 920 90
82 850 90
(ii) Deaths are uniformly distributed over each year of age.

Calculate e[82].
A. 7.9

B. 8.0

C. 8.1

D. 8.2

E. 8.3

8.836842

7.86

7.736842

3. You are given the following information for a person aged x:

(1)

(i) x (t) = 0.05 for 0 t

(2)

(ii) x (t) =

1
for 0 t < 20
20 t

where the index (1) indicated death due to accidental causes and the index (2) indicates death
due to non-accidental causes.
Determine the probability that (x) will die due to accidental causes.
A. e1

B. 1 e1

C. e1.5

D. 1 e1.5

E. e2

4. You are given:

(i) Bill and Ted are both age 30.
(ii) Bills force of mortality function is (x) =

4
100x

(iii) Teds force of mortality function is (y) =

3
100x

Find the probability that Bill dies within 10 years and after Ted.
A. 0.083

B. 0.093

C. 0.103

D. 0.113

E. 0.123

5. For a special fully-discrete whole life whole life insurance issued to a (x) you are given:
(i) The death benefit is paid at the end of the year of death.
(ii) The death benefit paid at the end of the hth year is bh .
(iii) The terminal reserve at time h is Vh+1 .
(iv) The level benefit premium paid at the beginning of each year is P .
(v) The annual effective rate of interest is i.
Which of the following is an expression for the tth terminal reserve for this special policy?

A. P st

t1
!

qx+h (bh h V ) (1 + i)th

B. P st

t1
!

qx+h (bh h V ) (1 + i)th

C. P st

t
!

vqx+h (bh+1 h+1 V ) (1 + i)th

D. P st

t
!

vqx+h (bh+1 h+1 V ) (1 + i)th

E. P st

t1
!

vqx+h (bh+1 h+1 V ) (1 + i)th

h=0

h=0

h=0

h=0

h=0

6. For fully discrete 3-year endowment insurance of 1000 on (x), you are given:
(i) i = 0.10
(ii) Expenses, which occur at the beginning of the policy year, are as follows:
First Year Renewal Years
Percentage of premium
20%
6%
Per policy
8
2
(iii) The annual contract premium is equal to 314.
(iv) The following double-decrement table:
k
0
1
2

( )

px+k
0.54
0.62
0.50

(d)

qx+k
0.08
0.09
0.50

(w)

qx+k
0.38
0.29
0.00

(v) The following table of cash values and asset shares:

k
0
1

k+1 CV

k AS

247
571

0
-

Calculate 2AS.
A. 257

B. 326

C. 415

D. 423

E. 452

7. The random variable k L is the prospective loss at time k for a fully discrete 3-year endowment
insurance of 3 on (x).
You are given:
(i) qx = 0.009
(ii) qx+1 = 0.011
(iii) The premium is 3Px:3 = 0.834
k 3 k Vx:3
1 0.898
(iv)
2
3 3.000
Determine 3 2Vx:3 .
A. 1.692

B. 1.792

C. 1.892

D. 1.992

E. 2.092

8. For a last-survivor 20-year term insurance of 1000 on (x) and (y) you are given:
(i) The death benefit is payable at the moment of the second death if the second death occurs
during the next 20 years.
(ii) The independent random variables T (x), T (y), and Z are the components of a common
shock model.
T (x)

(iii) T (x) has an exponential distribution with x

(iv) T (y) has an exponential distribution with

(t) = 0.03, t 0

T (y)
y (t)

= 0.05, t 0

(v) Z, the common shock random variable, has an exponential distribution with Z (t) =
0.02, t 0
(vi) = 0.06
Calculate the actuarial present value of this insurance.
A. 0.198

B. 0.216

C. 0.271

D. 0.303

E. 0.326

9. You are given the following forms of decrement:

(d) death
(w) withdrawal
(i) early retirement
(r) normal retirement
You are also given:
(i) Decrements follow the Illustrative Service Table.
(ii) For partial years all decrements are uniformly distributed in the multiple-decrement table.
(d)

Calculate q &35 .
A. 0.00134

B. 0.00144

C. 0.00154

D. 0.00164

E. 0.00174

10. You are given:

2x
for 0 x < 100
10,000 x2
Determine the probability that a life aged 30 dies between ages 40 and 50, 10|10q30 .
(x) =

A. 0.05

B. 0.10

C. 0.15

D. 0.20

E. 0.25

11. The total dental claims for an insured are classifed each year as full (F), partial (P) or no claims
(N). The transition from year to year is as follows

Given that an insured has no claims in 2009, what is the probability of no claims in 2012?
A. 0.17

B. 0.18

C. 0.19

D. 0.20

E. 0.21

12. On average James Washer receives 13.8 emails per day, which arrive according to a Poisson
process. 50% of all his emails are MLC-related. For a given day, starting at midnight, what is
the median time until James receives his first MLC-related email for the day?
A. 2:20 am

B. 2:25 am

C. 2:30 am

D. 2:35 am

E. 2:40 am

13. For a 20-year endowment insurance of 100 on (40) with death benefit payable at the end of the
year of death, you are given:
(i) i = 6%
(ii) Mortality follows the Illustrative Life Table.
(iii) Z is the present value random variable for this insurance.
Calculate Var(Z).
A. 48

B. 72

C. 106

D. 183

E. 299

14. Your best friend, Amy, won the lottery and is given 5 options for her winnings:
1. A lump-sum of $1,000,000 today.
2. A lump-sum of $500,000 today and another lump-sum of $1,000,000 in 20 years if she is
still alive.
3. $70,000 at the beginning of each year for the rest of her life starting today.
4. $150,000 at the beginning of each year for the rest of her life starting today, but no more
than 10 payments.
5. $50,000 at the beginning of each year for the rest of her life starting today, but no less than
10 payments.
Your friend is not an actuary and turns to you for help. You decide to advise her to take the
option with the largest actuarial present value. You make the following assumptions:
(i) i = 6%
(ii) Amy just turned 41 today.
(iii) Amys mortality follows the Illustrative Life Table.
Which option do you advise your friend to take?
A. 1

B. 2

C. 3

D. 4

E. 5

15. For a fully discrete whole life insurance of $100,000 on each of 10,000 lives age 60, you are given:
(i) The future lifetimes are independent.
(ii) Mortality follows the Illustrative Life Table.
(iii) i = 0.06
(iv) $3380 is the premium for each insurance of $100,000.
Using the normal approximation, calculate the probability of a positive total loss.
A. 0.0091

B. 0.0096

C. 0.0102

D. 0.0110

E. 0.0118

16. You are given the following:

(i) (x) = 0.04
(ii) = 0.06
(iii) Two lives (30) and (40) are independent.
!
"
T (30:40) T (30:40)
Calculate Cov v
,v
.
A. 0.00

B. 0.01

C. 0.02

D. 0.03

E. 0.04

17. You are given the following:

(i) Mortality follows the Illustrative Life Table.
(ii) i = 0.06
Calculate 1000 (10V30:20 ) .
A. 356

B. 366

C. 376

D. 386

E. 396

18. Rainfall is modeled by a homogeneous Markov Chain. If it rained on a given day then the prob
that it rains the next day is 0.7. If it didnt rain on a given day then the probability that rains
the next day is 0.2. When it rains the total rainfall for the day is always 2 inches of rain. Given
that it rained today, what is the variance of the total rainfall for the next 3 days?
A. 5.08

B. 5.18

C. 5.28

D. 5.38

E. 5.48

19. A worker has become disabled as a result of an occupational disease. The workers compensation
laws of state X specify that, in addition to disability benefits, the workers estate will receive a
lump sum payment at the time of her death if the worker dies as a result of the occupational
disease.
You are given:
(i) The lump sum payment is $50,000 if the death occurs within the next 20 years.
(ii) Otherwise, the lump sum payment is $25,000.
(iii) The force of mortality for death as a result of the disease, (1) = 0.02
(iv) The force of mortality for death from all other causes, (2) = 0.015
(v) The force of interest, = 0.05
Determine the actuarial present value of this death benefit.
A. $6,630

B. $10,315

C. $10,690

D. $11,765

E. $18,700

20. You are given:

(i) e30 is the expected future lifetime for (30) under the assumption of constant force with
= 0.10.
&

(ii) e 30 is the expected future lifetime for (30) if a life table is constructed at annual points in
time using a constant force of mortality model with = 0.10 and a uniform distribution
of deaths for partial years is assumed.
"&
#

Calculate 1000 e 30 e30 .

A. 0.0

B. 2.3

C. 4.3

D. 6.3

E. 8.3

21. You are given:

(i) Mortality follows the Illustrative Life Table.
(ii) i = 0.05
1
(iii) 1000A32:8
= 13.31
1
Calculate 1000A30:10
.

A. 14.20

B. 14.35

C. 14.50

D. 14.75

E. 14.95

22. Which of the following expressions equals Var (aT ), where 2ax is based on the force of interest
2?
%
1$
ax 2ax a2x

%
2$
2
B.
ax ax a2x

%2
1$
2
C.
ax ax a2x

%2
2$
2
D.
ax ax a2x

%2
1$
2
E.
ax ax ax

A.

23. You are given:

(i) Ax = 0.6
(ii) n|Ax = 0.4
(iii) Px = 0.1
(iv) Px+n = 0.2
1
Calculate P x:n
.

A. 0.05

B. 0.06

C. 0.07

D. 0.08

E. 0.09

24. The status of an insured can be classified as one of three states: Healthy (1), Disabled (2) or
Dead (3). You are given then following:
(i) Transitions happen at the end of each year.
(ii) A death benefit of $1000 is paid at the end of the year in which the insured transitions to
#3 from either #1 or #2.
(iii) Benefit premiums of P are paid by the insured at the beginning of every year if in State
#1.
(iv) If the insured is disabled at the start of a year then the premium is waived and the insurance
company pays the amount of the benefit premium to the insured.
(v) Policies are only issued to people currently in state #1.
(vi) d = 0.05%
(vii) The one-year transition matrix between states is

0.7 0.2 0.1

0.0 0.8 0.2
0.0 0.0 1.0
Using the equivalence principle calculate P for a 3-year term insurance policy.
A. 135

B. 140

C. 145

D. 150

E. 155

0.49

174.75

25. You are given two independent lives (x) and (y) and the following information:
(i) x = 20
(ii) y = 40
(iii) The lifetimes of (x) and (y) follow DeMoivres law, with = 100.
Calculate the probability that exactly one life will survive for at least 20 years.
A.

1
12

B.

1
4

C.

5
12

D.

7
12

E.

3
4

26. You are given the following information about a triple decrement insurance model:
(i) (1)(x) =

1
80x

for x < 80

(ii) (2)(x) =

2
80x

for x < 80

(iii) (3)(x) =

3
80x

for x < 80

(iv) i = 0
Calculate the actuarial present value of a continuous 10 year temporary annuity that pays 1
per year as long as no decrement has occurred issued to a life age 30.
A. 4.6

B. 5.6

C. 6.6

D. 7.6

E. 8.6

27. Harry the Hustler runs a 3 card monte game on a street corner in New York City. Players arrive
according to a Poisson process at a rate of 10 per day. Half of the players arriving are Fools
and the other half are Suckers.
Fools can expect to lose $100 with variance $1000. Suckers can expect to lose twice as much
as Fools, but their variance is half of the Fools variance. The police show up 20% of the time,
but only stop the Suckers from playing since a Fool and his money are soon parted anyways.
Find the standard deviation of Henrys profit for any given month. Assume a month is 30 days.
A. $2550

B. $2610

C. $2670

D. $2730

E. $2780

28. You are given the following:

40 0.15

$ %

P
Ax
15
0.015

$ %

P
Ax
20

45 0.20

0.020

0.018

60 0.40

0.040

0.039

Calculate
A. 0.02

20
5 V

A40 .

B. 0.03

Ax

C. 0.05

0.013

D. 0.07

E. 0.14

29. For a population of individuals age x, you are given:

(i) Each individual has a constant force of mortality.
(ii) The forces of mortality are uniformly distributed over the interval (0,1).
(iii) The constant force of interest is .
Calculate the actuarial present value of a continuously increasing, at
$ a% rate of 1 per year,
continuous whole life annuity drawn at random from this population, Ia x.
A. 1 +

B. ln(1 + )

1
C.
(1 + )

&

1
D. ln
(1 + )

'

E. Not enough information

30. After passing MLC an actuarial student decides to celebrate by drinking wine. She has two
choices - cheap and expensive. Since she is celebrating she decides her first glass will be the
expensive wine.
After her first glass there is 10% chance she will stop drinking. This probability will double
after each glass of wine she drinks.
After her first glass there is an 80% chance she will order the expensive wine again for her 2nd
glass (assuming she doesnt stop drinking). This probability will be cut in half with each glass
of expensive wine she drinks. Once she switches to cheap wine she will never order expensive
wine again.
What is the probability that she has a 3rd glass of wine and it is cheap?
A. 0.45

B. 0.47

C. 0.49

D. 0.51

E. 0.53