**12.1** The calculations are in Tables 12.1 and 12.2.

**Table 12.1** Calculations for Exercise 12.1.

**Table 12.2** Further calculations for Exercise 12.1.

**12.2**

**12.3**

**12.4** Using the raw data, the results are in Table 12.3. When the deductible and limit are imposed, the results are as in Table 12.4. Because 1,000 is a censoring point and not an observed loss value, there is no change in the survival function at 1,000.

**Table 12.3** Calculations for Exercise 12.4.

**Table 12.4** Further calculations for Exercise 12.4.

**12.5** Suppose the lapse was at time 1. The estimate of *S*(4) is (3/4)(2/3)(1/2) = 0.25. If it is at time 2, the estimate is (4/5)(2/3)(1/2) = 0.27. If it is at time 3, the estimate is (4/5)(3/4)(1/2) = 0.3. If it is at time 4, the estimate is (4/5)(3/4)(2/3) = 0.4. If it is at time 5, the estimate is (4/5)(3/4)(2/3)(1/2) = 0.20. ...

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