Independent solution

How to solve this Conditional Probability question

Setup

Setup

Let H and W be the events that the husband and wife, respectively, are alive after ten years.

Pr⁡(H)=0.85,Pr⁡(W)=0.95\Pr(H)=0.85,\qquad \Pr(W)=0.95

Model

Model

Payments continue on H union W. Independence makes the probability that both have died the product of their death probabilities.

Pr⁡(H∪W)=1−Pr⁡(Hc∩Wc)=1−(0.15)(0.05)\Pr(H\cup W)=1-\Pr(H^c\cap W^c)=1-(0.15)(0.05)

Compute

Compute

Because H is contained in the continuation event, its joint probability with that event is simply Pr(H).

Pr⁡(H∪W)=0.9925\Pr(H\cup W)=0.9925
Pr⁡(H∣H∪W)=Pr⁡(H)Pr⁡(H∪W)\Pr(H\mid H\cup W)=\frac{\Pr(H)}{\Pr(H\cup W)}
0.850.9925=0.8564231738…\frac{0.85}{0.9925}=0.8564231738\ldots

Answer

Answer

Conditional on continued payments, the husband's survival probability is approximately 0.856.

0.856(B)\boxed{0.856\quad\text{(B)}}