actuarial question

[chris]

Not plan related but anybody have a link on the web to a formula for computing the risk premium for a self-cancelling installment note, i.e., premium based on probability of seller not surviving the note term and thus collecting all payments, etc....? Thanks in advance.

[MGB]

I would think it is the following:

(PV of annuity certain for the duration) minus (PV of a temporary life annuity for the same duration)

Of course, which mortality table to use in the second part is a very open issue.

But, there would also be adjustments to both of the above for other types of default risk, so that this gross approach may not produce the correct answer.