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Term Life Insurance & Whole Life Insurance Discussion

On the basis of the health records of a particular group of people, an insurance company

accepted 60% of the group for a 10 year life policy. Ten years later it examined the survival

rates for the whole group and found that 80% of those accepted for the policy had survived

the 10 years, while 50% of those rejected had survived the 10 years. What percentage of

the group did not survive 10 years? If a person did survive 10 years, what is the probability

that they had been refused cover?

Eapalekthiloom

Posts: 73
Joined: Fri Jan 31, 2014 2:48 pm

Let "x" represent that total number of people in the group.

What percentage of the group did not survive ten years?

= What percentage of people died before ten years was up?

= (60%)(20%)x + (40%)(50%)x

= (0.6)(0.2)x+(0.4)(0.5)x

= 0.12x + 0.20x

= 0.32x

Given this, could you maybe try to answer the second question?

32% of the group did not survive ten years
Ailbe

Posts: 51
Joined: Sun Jan 19, 2014 10:31 pm