A life insurance company issues a 20-year term assurance with additional permanent disability benefit. The benefits provided are: on death (whether the life was previously healthy or permanently disabled) a lump sum payment of 150,000 payable immediately on permanent disability a lump sum of 75,000 payable immediately. . (i) Draw a transition state model for this policy, labelling your diagram. [2] (ii) Calculate the total expected present value of the benefits. [8] Basis: Force of mortality from healthy Force of mortality from permanent disability Force of permanent disability Force of interest 0.03 for all ages 0.08 for all ages 0.001 for all ages 5% per annum [Total 10] A life insurance company issues a 20-year term assurance with additional permanent disability benefit. The benefits provided are: on death (whether the life was previously healthy or permanently disabled) a lump sum payment of 150,000 payable immediately on permanent disability a lump sum of 75,000 payable immediately. . (i) Draw a transition state model for this policy, labelling your diagram. [2] (ii) Calculate the total expected present value of the benefits. [8] Basis: Force of mortality from healthy Force of mortality from permanent disability Force of permanent disability Force of interest 0.03 for all ages 0.08 for all ages 0.001 for all ages 5% per annum [Total 10]