When calculating premiums on life insurance products insurance companies often use life tables that enable the probability
Question:
When calculating premiums on life insurance products insurance companies often use life tables that enable the probability of a person dying in any age interval to be calculated.
The following data obtained from New Zealand Abridged Period Life Table: 2014-2016 gives the number out of 100,000 New Zealand-born females and males who are still alive during each five-year period of life between age 20 and 60 (inclusive).
Number alive at exact age | ||
Exact age (years) | Out of 100,000 female born | Out of 100,000 males born |
20 | 99,288 | 99,031 |
25 | 99,128 | 98,685 |
30 | 98,949 | 98,312 |
35 | 98,726 | 97,899 |
40 | 98,427 | 97,381 |
45 | 97,934 | 96,649 |
50 | 97,157 | 95,548 |
55 | 95,933 | 93,853 |
60 | 94,162 | 91,352 |
a. What is the probability that a New Zealand-born female will reach the age of 30?
b. What is the probability that a New Zealand-born female will reach the age of 45?
c. What is the probability that a 20-year-old New Zealand-born female will reach the age of 30?
d. What is the probability that a 20-year-old New Zealand-born female will reach the age of 40?
e. A 30-year-old New Zealand-born female has purchased a term life policy that will pay her estate a million dollars if she dies within five years. What is the probability that the insurance company will pay her estate this amount?
f. Repeat (a) to (e) for New Zealand-born males.
Spreadsheet Modeling & Decision Analysis A Practical Introduction to Management Science
ISBN: 978-0324656633
5th edition
Authors: Cliff T. Ragsdale