Find the probability that premiums will cover claims

Reference no: EM131001583

A company decides to add 20% to its equivalence principle premiums as a protection against unfavourable experience. In each of the following cases, find the probability that premiums will cover claims. Suppose that T is exponential with μ = 0.04 and that δ = 0.06.

(a) A single-premium annuity providing continuous payments at the annual rate of 1 prior to failure.

(b) A contract paying 1 unit at failure, with level premiums payable continuously prior to failure.

Reference no: EM131001583

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