Question

An insurance company will only sell its Select policy to people for whom the probability of a stroke in the next ten years is less than .01. If a smoker with a systolic blood pressure of 230 applies for a Select policy, under what condition will the company sell him the policy if it adheres to this standard?

Answer 1

The insurance company would only sell the Select Policy insurance to a smoker with systolic blood pressure of 230 if after carrying out a medical test, t was found out that, the probability of him or her having a stroke is actually less than 0.01.

This is to insure that, the smoker didn't capitalise on his dying nature in-order to obtained the insurance thereby defrauding the insurance company.

Step-by-step explanation: