1. SET UP the calculations needed to compute the net single premium for a whole life policy (face amount equal to $1000) for a 65 year-old male. YOU DO NOT HAVE TO CALCULATE THE FINAL PREMIUM CHARGE; providing the calculations of the present value of the expected death expenses for the first three years and the last three years of the policy will be sufficient.
2. SET UP the calculations needed to compute the present value of an annuity due of one dollar (which in turn could be used to calculate the net level premium) for the whole life policy described in 2.A. above. In calculating this present value of an annuity due, assume that the net level premium will be paid throughout the term of the whole life policy. As in problem 2.A. above, setting up the calculations of the present value of the cash flows for the first three years and the last three years will be sufficient.