5. An insurance company wants to use a model of mortality of the form mu x = a/b

Question

5. An insurance company wants to use a model of mortality of the form mu x = a/b-c. Based on the company?s data, the life expectancy for an individual aged 65 is 19 years, and the probability of an individual aged 44 surviving for 10 years is 0.982. It is extremely important for these properties to match the observed data. The company chooses the values of a and b to ensure that these observations are matched by the model. Which of the following is the correct value of a? What is the corresponding value of b? Justify your answer. (i) 0.0443 (ii) 0.0654 (iii) 0.102 (iv) 0.288

Explanation / Answer

correct answer is (i) 0.0443

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