Endowment insurance polices emphasize the savings need, with only a small element of protection. This is a type of life insurance contract under which the insurer promises to pay a stated amount of money either to the beneficiary, at once, if the insured dies during the endowment period, or to the insured if he or she survives the endowment period.

(III) N-year Pure Endowment (n-YPE): benefit is payable only if the inured is still alive after N-year; otherwise no benefit is paid.

(IV) N--year Endowment (n-YE): benefit is payable either (1) the insured is dead within N-year or (2) he survives at year N. (combine N-YT with N-YPE)

For N - PE

Event                                            Probabilities           Benefit            PV of Benefit

Since N- YE is the combination of  N- YT and N - PE,

Find an expression in terms of  ,and of the actuarial present values of benefit for a 3-year pure endowment insurance of $100,000 issued to a person aged 22.

SOLUTION: