Life insurance policy payout probability

Reference no: EM13103603

The probability that Traci Muldone will die during the 10-year term of a life insurance policy is assessed by the insurance company at 1/5. Arthur Average's probability of living to the end of the 10-year period is reckoned at 95% What is the probability that at the end of the 10 years (a) both (b) one or the other, but not both is living?

Probability (Muldone dying) = 0.2 (given)
Probability (Average dying) = 1 - 0.95 (given)

Probability (both living) = 0.8 x 0.95 = 0.76 or 76%

i.e. Probability Muldone AND Average living = 76%

So what do we think is the probability of either one or the other (but NOT both) living?

Reference no: EM13103603

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