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in BUS 3024S - Contingencies by (990 points)

Hi, for Q24.6(ii) I'm slightly confused why we don't consider the case where the person can get permanently sick from the temp sick state. I understand that we are using one step probabilities but then I'm confused why they consider moving from different states when dealing with the death benefit. 


So I'm confused with point (2) in the memo. 


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1 Answer

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by (1.2k points)
Hi, 

I think it's just the way the question is framed. They say that the policies are issued to healthy individuals (so the starting state will always be healthy). You don't get to buy one of these policies if you are temporary sick.

Hope that helps
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