Second Life (SL) is a small life insurance company. Responding to demand from brokers, SL is developing a new product called Seconds Out. This is to be a product aimed at retired couples who wish to purchase large amounts of cover to provide a tax-efficient transfer of their wealth to their dependants. The policy pays out when the second of the two policyholders dies. SL is developing pricing assumptions for this new product, and is considering using one of the following two copulas to handle the correlated mortality expected with this product: -1/a Clayton copula: Clu,v7=(+4 +v-a-1) 44 - Farlie-Gumbel-Morgenstern (FGM) copula: Clu,v]=uv[1+0(1-u)(1-v)] One of the pricing assumptions is that the probability of survival for ten years for a 70-year-old life (regardless of gender) is 10P70 =0.58 (1) Using each of the two copulas with parameters a=0.3 and 0=-0.1 respectively, calculate the probability of paying a death benefit in the ten-year period following the issue of a Seconds Out policy to a couple who are both aged exactly 70. [3] Discuss the suitability of the copulas above by comparing the results to those when independent deaths are assumed. [3] ITotal 61