A life insurance company issues standard, preferred, and ultrapreferred policies. Of the

Chapter 1, Problem 1.5-6

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QUESTION:

A life insurance company issues standard, preferred, and ultrapreferred policies. Of the companys policyholders of a certain age, 60% have standard policies and a probability of 0.01 of dying in the next year, 30% have preferred policies and a probability of 0.008 of dying in the next year, and 10% have ultrapreferred policies and a probability of 0.007 of dying in the next year. A policyholder of that age dies in the next year. What are the conditional probabilities of the deceased having had a standard, a preferred, and an ultrapreferred policy?

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QUESTION:

A life insurance company issues standard, preferred, and ultrapreferred policies. Of the companys policyholders of a certain age, 60% have standard policies and a probability of 0.01 of dying in the next year, 30% have preferred policies and a probability of 0.008 of dying in the next year, and 10% have ultrapreferred policies and a probability of 0.007 of dying in the next year. A policyholder of that age dies in the next year. What are the conditional probabilities of the deceased having had a standard, a preferred, and an ultrapreferred policy?

ANSWER:

Step 1 of 2

Let be the events defined as follows:

Policyholder has a standard policy

Policyholder has a preferred policy

Policyholder has ultra-preferred policy

Policyholder dies next year.

Now,

Also,

To find

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