Life Insurance 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.)
Life Insurance 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.)
Solution Summary: The author calculates the amount the retired couple is willing to pay for a life insurance policy if the probability of living 5 more years for the man and the woman is 0.95.
Life Insurance 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.)
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