Final answer:
If the individual died 5 years after beginning the annuity phase of a flexible premium deferred life annuity with 20-year period certain, their beneficiary would receive payments for the remaining 15 years.
Step-by-step explanation:
An individual who buys a flexible premium deferred life annuity with a 20-year period certain means that if they pass away during the annuity phase, the annuity payments will continue to a designated beneficiary for the remainder of the 20-year period. Since the individual in question died 5 years after beginning the annuity phase, their beneficiary would receive annuity payments for the remaining 15 years of the period certain.
The scenario provided for calculating life insurance premiums involves two groups of men, differentiated by family cancer history. To find the actuarially fair premium for each group if the insurance policy pays out $100,000 upon death:
The group with family history of cancer (20% of 1000 men, so 200 men) has a 1 in 50 chance of dying in the next year, so expected deaths are 200/50 = 4 deaths. The fair premium would be ($100,000 * 4) / 200 = $2,000 per person.
The group without a family history of cancer (80% of 1000 men, so 800 men) has a 1 in 200 chance of dying in the next year, so expected deaths are 800/200 = 4 deaths. The fair premium would be ($100,000 * 4) / 800 = $500 per person.