In this workout, we're told that a unit-linked policy offers a death benefit based on the policyholder's account value, plus a guaranteed minimum death benefit of 200.

The cost of insurance, which is paid at the start of each year, and investment returns are set out below, and asset management charges, which are paid at the end of each year, are 2%.

We're asked to calculate the death benefit payable if the policyholder dies at the end of year 10.

Now, we'll assume that premiums are paid at the start of each year and benefits are paid at the end of each year.

Now, unit-linked policies act like an investment savings account, so we need to work out the policyholder's account balance at the end of each year. I'm going to scroll down first of all and start off with a zero balance, and that is going to become the beginning balance at the start of my next year.

We then add the premium paid and subtract the cost of insurance.

Note that BOY stands for beginning of the year, which is when the premium is paid and the cost of insurance is charged to the policyholder.

We then calculate the investment return, which for year one is 6% multiplied by the sum of the beginning balance, plus the premium, less the cost of insurance.

Which for year one is an investment return of 5.7.

We then subtract the asset management charges.

Note that EOY stands for end of year, which is when the asset management charges are charged to the policyholder.

This fee is 2% of the ending account balance.

So that's 2% multiplied by the sum of our beginning balance, our premium, less our cost of insurance, plus our investment return, and then I'll multiply that by minus one to deduct it from the account balance.

And that gives asset management charges of two in year one.

We can then add together all of the entries above to give the ending balance on the account of 98.7 for year one.

Once we've done that, we can then roll forward our calculations to year 10.

And we can see that the ending balance for year 10 is 967.1.

Now, we've been asked to calculate the death benefit payable if the policyholder dies at the end of year 10, and the question tells us that the death benefit is the policyholder's account value plus a guaranteed minimum death benefit.

So this means that the death benefit is going to be 967.1 plus the 200 guaranteed minimum death benefit, giving a total death benefit of 1,167.1.