Question

15 percent of a certain company's life insurance policy holders are smokers. For each nonsmoker the probability of dying during the year is 0.011. For each smoker the probability of dying during the year is 0.04. Find the probability that a policy holder who died last year was a smoker.

Answer 1

`P=(Percentage_{\text{Smoker Policy Holders}})(Probability_{\text{Smokers Dying}})`

Percentage of Smoker Policy Holders = 15% / 100% = 0.15

Probability of Smokers Dying = 0.04

Let's substitute the values to the equation, we get,

`\text{ P = (0.15)(0.04) = 0.006}`

The probability that a policy holder who died last year was a smoker = 0.006