In KYC E1, we examined the relationship between age and life expectancy

Accounting Jan 27, 2021

In KYC E1, we examined the relationship between age and life expectancy. Challenger has a perpetual annuity product that pays the policyholder an annual payment for as long as they are alive. How can age-based life expectancy help Challenger price this product?

Expert Solution

In australia, life expectancy is around 85 years and retirement start from 65 years in this case ifpeople should start early to pay policyholder to get fixed income until 85 years otherwise, they wouldpay great coupon to support them until 85 years.

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