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Answer: Life Insurance A life insurance company sells a

Chapter 11, Problem 27AYU

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QUESTION:

Life Insurance A life insurance company sells a $250,000 1-year term life insurance policy to a 20-year-old female for $200. According to the National Vital Statistics Report, 58(21), the probability that the female survives the year is 0.999544. Compute and interpret the expected value of this policy to the insurance company.

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QUESTION:

Life Insurance A life insurance company sells a $250,000 1-year term life insurance policy to a 20-year-old female for $200. According to the National Vital Statistics Report, 58(21), the probability that the female survives the year is 0.999544. Compute and interpret the expected value of this policy to the insurance company.

ANSWER:

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A life insurance company sells a $250,000 1-year term life insurance policy to a 20-year-old female for $200.

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