Problem
The life insurer has an investment portfolio with some old bonds, bought in the 1990s with a nice coupon. Given its asset mix with corporate bonds, emerging market debt and a modest allocation in shares in addition, the insurer calculates with an investment return of 6% p.a. Annual administrative expenses are €500 per policy.
Suppose the 25-year-old client passes away between 25 and 26 years old, what is the technical result for the life insurer on this policy then?