1.1 An actuary is profit testing a 15-year endowment assurance policy. The sum assured is £25,000 payable on survival or at the end of the year of earlier death. On surrender, a return of premiur is paid without interest at the end of the year of surrender. A level premium of £1,500pa is payable annually in advance. For a policy in force at the start of the eighth year the remaining details are as follows: Renewal expenses (£) 35
Claim expenses on death or surrender (£) 75
Reserve at the start of year (£) 8,000
Reserve at end of year per survivor (£) 9,300
Rate of interest (£) 8% pa
Dependent probability of death during 8th year (£) 0,02
Dependent probability of surrender during 8th year (£) 0,05
Calculate the profit expected to emerge at the end of the eighth year, per policy in force at the start of that year.