or to his disability. What is the total amount of disability coverage can Peter receive? Question 2 options: Peter can receive up to 100% of regular income using all three insurance policies. Peter may only receive 100% of regular income. He can then negotiate with his insurance companies to boost the amount to 150% of regular income. Peter can receive a total of 150% of regular income using all three insurance policies. Peter can only receive 50% of regular income using all three insurance policies.
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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?
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