Midi Page 5 of 7 4. (15 points) An insurance company issues a joint life insurance policy to a married couple. The husband is aged 28 and his wife is aged 27. The policy provides a benefit of $500000 immediately on the death of the husband provided that he dies first. The policy terms stipulate that if the couple die at the same time, the elder life is deemed to have died first. Premiums are payable annually in advance while both lives are alive for at most 30 years. Use the common shock model illustrated below to calculate the annual net premium using an effectibe rate of interest of 5% per year and transition intensities of My = A + BCM, 23 = A + Dc", 3 = 5+10-5, where A = 0.0001, B = 0.0003, c = 1.075 and D= 0.00035. Husband Alive Wife Alive 0 Husband Alive Wife Dead Husband Dead Wife Alive 2 Husband Dead Wife Dead 3 Midi Page 5 of 7 4. (15 points) An insurance company issues a joint life insurance policy to a married couple. The husband is aged 28 and his wife is aged 27. The policy provides a benefit of $500000 immediately on the death of the husband provided that he dies first. The policy terms stipulate that if the couple die at the same time, the elder life is deemed to have died first. Premiums are payable annually in advance while both lives are alive for at most 30 years. Use the common shock model illustrated below to calculate the annual net premium using an effectibe rate of interest of 5% per year and transition intensities of My = A + BCM, 23 = A + Dc", 3 = 5+10-5, where A = 0.0001, B = 0.0003, c = 1.075 and D= 0.00035. Husband Alive Wife Alive 0 Husband Alive Wife Dead Husband Dead Wife Alive 2 Husband Dead Wife Dead 3