Final answer:
The question seems to ask about spousal insurance limits under Texas code, but the information provided is about calculating actuarial fair premiums for life insurance policies based on mortality risks. Actuarial fair premiums are determined by the probability and payout for insured events. If an insurance company charges a fair premium to a diverse risk group without differentiation, it may face adverse selection issues.
Step-by-step explanation:
The student's question seems to be seeking information regarding life insurance policy premiums in the context of the Texas code. However, the provided information pertains to actuarial calculations and does not directly answer the Texas code specifics related to spousal insurance limits. Nonetheless, I shall assist with the actuarial aspect which falls under the business category at the college level.
Actuarial Fair Premiums
Actuarially fair premiums are calculated based on the probability of an insured event occurring within the policy period and the payout upon that event. Using the given example:
- For men with a family history of cancer (20% of 1,000 men) with a 1 in 50 chance of dying, the actuarially fair premium would be (20% * 1,000) * (1/50) * $100,000, divided by the number of men in this group.
- For men without a family history of cancer (80% of 1,000 men) with a 1 in 200 chance of dying, the premium would be (80% * 1,000) * (1/200) * $100,000, divided by the number of men in this group.
To calculate the fair premium for the group as a whole without distinguishing cancer history, you would combine the calculated risks and payouts of both groups and divide by the total population.
If the insurance company charges the actuarially fair premium for the whole group without distinguishing between the two groups, there could be an issue of adverse selection where individuals with a higher risk are more likely to buy the insurance, potentially leading to financial losses for the company.