LIFE INSURANCE MATHEMATICS 19

starting out at age 10, will be one of them is plainly .99251. The present value of the chance that this dollar will be paid is, therefore, $.97087 multiplied by .99251.

Proceed in like manner for each successive age and add together the results. This gives you the present value of one dollar paid at the beginning of each year that the youth will en-ter upon. You also have in the single premium the present value of all he needs to pay to carry life insurance for $1,000 as long as he lives. If you divide the latter by the former you have the number of dollars payable at the beginning of each year if the insured is living, which are equivalent in present value to the annually in-creasing premiums which are required to be met in order to carry his insurance as long as he lives. In other words, you have the sufficient annual premium.

These premiums are called "net" because just sufficient to meet the claims if mortality and interest prove to be precisely as was assumed. Though the foregoing explanation will not, it is hoped, be found difficult to grasp, it is not necessary to have mastered even so much in order to be in possession of knowledge of the test to which all kinds of premiums must respond, in order that they may be known to be sufficient. This test is:

Assume, for instance, that 100,000 youths of