16 BUSINESS OF LIFE INSURANCE

Let us assume that the funds which are not immediately required to pay death losses will be invested to earn interest at 3 per cent per annum. Also that death claims are payable at the end of the year, which is not the case, of course, but it is assumed usually for convenience in calculations.

At age 10, according to this table, out of 100,-000 living at the beginning of the year, 749 die during the year. The risk of having to pay the claim at the end of the first year, therefore, is .00749. The present value now of each dollar to be paid at the end of one year is $.97087, or of $1,000, $970.87. The present value of the chance of paying it is $970.87 multiplied by .00749.

Out of the 100,000 starting from age 10, 746 are expected to die the second year, i. e., in their eleventh year of age. The chance that any particular one of the 100,000 will be among them is .00746; the present value of the $1,000 if it is paid at the end of two years is $942.60; the