Question: Using life insurance tables, a retired couple determines that the probability of living 5 more years is .9 for the man and .95 for the

Using life insurance tables, a retired couple determines that the probability of living 5 more years is .9 for the man and .95 for the woman. They decide to take out a life insurance policy that will pay $10,000 if either one dies during the next 5 years and $15,000 if both die during that time. How much should they be willing to pay for this policy? (Assume that their life spans are independent events.)

Step by Step Solution

★★★★★

3.50 Rating (177 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

The probability the man dies is 01 The probability t... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

1385-M-S-L-P(2752).docx

120 KBs Word File

Students Have Also Explored These Related Statistics Questions!

If the dashpot has a damping coefficient of c = 50 N s/m, and the spring has a stiffness of k = 600 N/m, show that the system is underdamped, and then find the pendulum's period of oscillation. The...

Using life insurance tables, a retired man determines that the probability of living 5 more years is .9. He decides to take out a life insurance policy that will pay $10,000 in the event that he dies...

An egg distributor determines that the probability that any individual egg has a crack is 0.14. (a) Write the binomial probability formula to determine the probability that exactly x eggs of n eggs...

Student Life Insurance Company wants to offer an insurance plan with a maximum claim amount of $5,000 for dorm students to cover theft of certain items. Past experience suggests that the probability...

Match the terms associated with managing your use of life insurance with the descriptions of the terms. (Note: These are not necessarily complete definitions, but there is only one correct...

1.You and your client Kerpal have concluded that his insurance needs would be best served with a participating whole life policy. You have reviewed the historical dividend scale and he is satisfied...

1 What are the main components of personal financial planning? Solve What is the purpose of a financial plan? Solve Identify some common actions taken to achieve financial goals. How does a job...

Help me answer all of the following activities and please do follow the page numberings thank you in advance Activity 3. Direction: Read and analyze the situation below. Answer the questions as...

All questions are to be answered in a short essay form. Structure your answers around the factual basis. 1. Landlord-tenant relationship is a peculiar one. Please discuss legal aspects of this...

Hi, I have an Assignment for my Finance Subject. I have attached the necessary documentation here for you to view including the Lecture slides of all the Topics covered for this assignment. Please...

Im having trouble with question 3 part A of the attached file. I know and understand her needs but im not sure if im filling out the table correctly ? Assignment Tier 1 Financial Planning...

Raphael Corporation's balance sheet shows the following stockholders' equity section. Preferred stock-5% cumulative, s par value, 1,000 shares authorized, issued, and outstanding Connon stock-s par...

I need someone to log into my Sam account and help me with my next two assignments using the Microsoft Access. You'll need a windows computer to complete this assignment.

2 0 - 2 7 Astor Electronics, Inc., markets a wide variety of computer - related products 2 0 - 5 , 2 0 - 6 throughout the United States. Astor s officers decided to raise $ 1 million by selling...

Teague Company engaged in the following transactions in October 2014: Oct. 7 Sold merchandise on credit to Mel Forde, terms n/30, FOB shipping point, $12,000 (cost, $7,200). 8 Purchased merchandise...

Selected account balances at December 31, 2014, for Infosys Company follow. Prepare a multistep income statement for the year ended December 31, 2014. Show detail of net sales. The company uses the...

Cook Consultants is currently in the process of completing the systems implementation activities for converting The Samuel Companys old system to a new one. Because of unexpected delays in performing...

Stevenson Apparel is a manufacturer of fashion clothing that has just opened its first large retail store for selling in-season clothes at regular prices. The companys competitive strategy depends on...

Sure Corp. operates under ideal conditions of certainty. It acquired its sole asset on January 1, 2015. The asset will yield $ 600 cash at the end of each year from 2015 to 2017, inclusive, after...

(c) By differentiating this consumption function $ C_1 $ (including differentiation of $ W_1 $) with respect to $ R $, show that $$ \frac{dC_1}{dR} = -\frac{C_1}{1 + R} + \frac{Y_2}{1 + R} +...

Tversky and Kahneman23 asked a group of subjects to carry out the following task. They are told that: Linda is 31, single, outspoken, and very bright. She majored in philosophy in college. As a...

A life table is a table that lists for a given number of births the estimated number of people who will live to a given age. In Appendix C we give a life table based upon 100,000 births for ages from...

(From Sholander24) In a standard clover-leaf interchange, there are four ramps for making right-hand turns, and inside these four ramps, there are four more ramps for making left-hand turns. Your car...

7. What is the implied interest rate for the first choice and which investment should you choose? 8. Suppose you want to buy some new furniture for your family room. You currently have $500 and the...

The current price of a non-dividend-paying stock is $30. Over the next six months it is expected to rise to $36 or fall to $26. Assume the risk-free rate is zero. I. What long position in the stock...

You take long position for your contract. Contract Size = 100 By using the spot and futures prices of Oct. 11, 2021 for your asset, if the continuously compounded interest rate is 10% (Use 360 days =...