Question

There is a 0.9989 probability that a randomly selected 31​-year-old male lives through the year. A life insurance company charges ​$156 for insuring that the male will live through the year. If the male does not survive the​ year, the policy pays out ​$120 comma 000 as a death benefit. Complete parts​ (a) through​ (c) below. a. From the perspective of the 31​-year-old ​male, what are the monetary values corresponding to the two events of surviving the year and not​ surviving?

Answer 1

Monetary value of surviving: -$156.

Monetary value of not surviving: $120,000.

Explanation:

If he survives, he is going to have to pay $156 to the company.

If he dies, his family is paid $120,000.

So,

Monetary value of surviving: -$156.

Monetary value of not surviving: $120,000.