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A life insurance company sells 1-year pet insurance policies. If the pet dies during the year, the sum assured is payable at the end of
A life insurance company sells 1-year pet insurance policies. If the pet dies during the year, the sum assured is payable at the end of the year. If the pet escapes, no benefit is payable and the policy is cancelled. The company uses the following dependent decrement rates to price these policies: The company assumes that the forces of decrement are constant over the year, that the two decrements operate independently and that the independent and dependent forces of decrement are equal. The company has proposed reducing the underlying independent mortality rate to 70% of the current value. Calculate, showing all working, the proposed new dependent decrement rates. [7]
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