Question

Example 5: An insurance company has written two life insurance policies for a husband and wife. Policy 1 pays $10,000 to their estate if both husband and wife die during the year. Policy 2 pays $100,000 to the surviving spouse if either husband or wife dies during this year. (If both die, then a single payment of $100,000 goes to the estate.) The probability that the husband will die during this year is 0.011. The probability that the wife will die this year is 0.008. Find the probability that each policy will pay a benefit this year. You may assume that the deaths of the husband and wife are independent. (A) MC 7: What is the probability that policy 1 will be paid? (B) MC 8: What is the probability that policy 2 will be paid?

          Example 5: An insurance company has written two life insurance policies for a husband and wife. Policy 1 pays $10,000 to their estate if both husband and wife die during the year. Policy 2 pays $100,000 to the surviving spouse if either husband or wife dies during this year. (If both die, then a single payment of $100,000 goes to the estate.) The probability that the husband will die during this year is 0.011. The probability that the wife will die this year is 0.008. Find the probability that each policy will pay a benefit this year. You may assume that the deaths of the husband and wife are independent.

(A) MC 7: What is the probability that policy 1 will be paid?

(B) MC 8: What is the probability that policy 2 will be paid?

Example 5: An insurance company has written two life insurance policies for a husband and wife. Policy 1 pays 10,000 to their estate if both husband and wife die during the year. Policy 2 pays100,000 to the surviving spouse if either husband or wife dies during this year. (If both die, then a single payment of 100,000 goes to the estate.) The probability that the husband will die during this year is 0.011. The probability that the wife will die this year is 0.008. Find the probability that each policy will pay a benefit this year. You may assume that the deaths of the husband and wife are independent.

(A) MC 7: What is the probability that policy 1 will be paid?

(B) MC 8: What is the probability that policy 2 will be paid?

Added by Kyle A.

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