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Solution: Life Insurance A life insurance company sells a
Chapter 11, Problem 28AYU(choose chapter or problem)
Problem 28AYU
Life Insurance A life insurance company sells a $250,000 1-year term life insurance policy to a 20-year-old male for $350. According to the National Vital Statistics Report, 58(21), the probability that the male survives the year is 0.998734. Compute and interpret the expected value of this policy to the insurance company.
Questions & Answers
QUESTION:
Problem 28AYU
Life Insurance A life insurance company sells a $250,000 1-year term life insurance policy to a 20-year-old male for $350. According to the National Vital Statistics Report, 58(21), the probability that the male survives the year is 0.998734. Compute and interpret the expected value of this policy to the insurance company.
ANSWER:
Answer :
Step 1 : A life insurance company sells a $250,000 1-year term life insurance policy to a 20-year-old male for $350.