Could you help in understanding how have the values been taken from AM92 tables since I was unable to calculate the same?
Hi Muskan I think you probably have the 2022 version of the course as this solution was re-written for the 2023 exams to make it easier to follow. For example, 0.00196137 is the probability of a claim in the second year from someone who doesn't exercise the option. This applies to 70% of the people and they have standard mortality. So 0.00196137 = 0.7 * (1 - q_50) q_51. Similarly, 0.0016812 is the probability of a claim in the second year from someone who does exercise the option. This applies to 30% of the people and they have double mortality in the second year. So 0.0016812 = 0.3 * (1 - q_50) 2 q_51. Best wishes Mark
