Question

Suppose a life insurance company sells a ​$ ​one-year term life insurance policy to a ​-year-old female for ​$. The probability that the female survives the year is . Compute and interpret the expected value of this policy to the insurance company. In the Show Work​ window, set up the probability distribution you used to calculate the expected value.

Answer 1

The answer is "$ 281.65"

Explanation:

It chances of women surviving the year are
`= 0.999535`

The possibility of the woman staying in the year is:

`=1-0.999535 \\\\=0.000465`

Unless the woman survives, the company will turn a profit
`= \$ \ 370`

When a woman dies, the business loses:

`\$ \ 189630(370- 190000 = -189630)\\`

Calculate the assurance company's estimated benefit of the scheme:

`=370 * 0.999535 -189630 * 0.000465\\\\= 369.828 -88.17795 \\\\= 281.65`

The assurance company anticipated the importance of the policy:

`\$\ 281.65`