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A 20-year disability income policy on (a) is modeled with the following Markov chain: Healthy Sick Dead 1 You are given: (i) Transition forces


A 20-year disability income policy on (a) is modeled with the following Markov chain: Healthy Sick Dead 1 You are given: (i) Transition forces +10=0.1, +10 === 0.04, +10 0.08, +10=0.05. (ii) +95 +10 for all i and j. (iii) 6=0.08. (iv) The policy pays a continuous annuity benefit of 1200 per year while sick and a death benefit of 20,000 at the moment of death. (v) Continuous premiums for the policy are 200 per year, paid only when healthy. (vi) 10(0)=2250, 10V(1) = 11,000. Calculate 9.5V) using Euler's method with step 0.5 to numerically solve Thiele's dif- ferential equation.

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