Page 9 - Life Insurance Today March 2016

CONCEPT OF
PROBABILITY AS
APPLIED IN LIFE
INSURANCE

A. Introduction: when a symmetrical dice with six faces numbered 1, 2, 3,
4, 5 & 6 is thrown, in a game of Ludo, or similar others
There is a proverb "Head I win Tail you lose" - that using this dice, likelihood is that the face numbered 5 will
indicates a coin normally used to start a match say, the turn up is 1/6. However, when the situation is complicated
National Kabaddi competition that has recently ended or one cannot decide the probability of happening of a
in the T20 World Cup Cricket matches that are knocking particular event by intuition.
at our doors,everywhere . Considering a coin which is
symmetrical with regard to its two sides, Head & Tail, when B. Concept of probability:
it is tossed, it may turn up either Head or Tail. Any one
captain of the two competing teams needs to call for the Now we need to analyze these above cited examples in
loss to win or loss - simply going by intuition. details. In the first case, there are two equally likely
outcomes (events) of turning up a coin possible, either
So by intuition one can say that the chance (i.e. Head or Tail. Only one of these can occur at a time.
probability) of getting Head as upper face is half. Similarly Therefore, they are called to be mutually exclusive events,
i.e. if one occurs the other cannot occur simultaneously.
About the author
Furthermore, only these two events are possible on tossing
Anabil Bhattacharya of a coin and none other. So they are called exhaustive
events, meaning thereby that other than the said two
B.M.E. (Hons.), F.I.I.I. events no other event is possible. Out of the two events
C.M. & Faculty Member one is favourable in getting, say, Head on upper side. Thus
N.C.I.L., Narendrapur
Kolkata

"Live as if you were to die tomorrow. Learn as if you were to live forever."

Life Insurance Today March 2016 9