Consider a 1-year term policy that provides a sickness benefit continuously at an annual rate of 2,000 during the first

[answerhappygod]

Consider a 1-year term policy that provides a sickness benefit
continuously at an annual rate of 2,000 during the first period of
sickness. Explain how to calculate the single net premium using a
multiple state Markov model with three states, H (healty), S (sick)
and D (death), and the equivalence principle. Explain how you
should modify the calculation if the interest rate is variable: in
the first half year, the interest rate is i, and the interest rates
drops to (i-0.25) in the second half year.