10. ACTUARIAL LTAM QUESTION

10. A multi-state model is used for disability. A risk may be in the following states: State 0 = active State 1 = disabled State 2 = dead The probabilities of transition between these states within one year do not vary by year. p1 = 0.1; p2 = 0.1; pl = 0.3; p = 0.1. All other transition probabilities between 0 and 1 are = 0. You are given: a. a fully discrete disability coverage pays $1,000 at the end of each year if the insured is disabled at the beginning of the year. b. Coverage is for 4 years; C. Premiums are payable while active. d. v=0.95 Determine the net premium for a life currently active. Select one: O A. 110.69 O B. 116.52 O C. 122.65 D. 125.30 E. 129.11