A 28-year-old man pays $236 for a one-year life insurance policy with coverage of $19,798.

A 28-year-old man pays $236 for a one-year life insurance policy with coverage of $19,798. If the probability that he will live through the year is 0.994, what is the expected value for the insurance policy?

Expert Solution

Given that:

A 28-year-old man pays $236 for a one-year life insurance policy with coverage of $19,798. If the probability that he will live through the year is 0.994

Expected value for the insurance policy

= -236*0.994+ (19,798 - 236)*(1 - 0.994)

= -236*0.994+ 19,562*0.006

= -234.584+117.372

= -$117.212

orchestra answered 2 years ago

A 28-year-old man pays $254 for a one-year life insurance policy with coverage of $11,684. If...

A 28-year-old man pays $254 for a one-year life insurance policy with coverage of $11,684. If the probability that he will live through the year is 0.995, what is the expected value for the insurance policy?

A 28-year-old man pays $125 for a one-year life insurance policy with coverage of $140,000.

A 28-year-old man pays $125 for a one-year life insurance policy with coverage of $140,000. If the probability that he will live through the year is 0.9994, to the nearest dollar, what is the man’s expected value for the insurance policy?a.a)$139,916b)−$41c)$84d)−$124

A 28 year old individual determines that they need a $500,000 life insurance policy, would like...

A 28 year old individual determines that they need a $500,000 life insurance policy, would like a savings component of the same, and be able to retire at age 67. Should the individual choose a whole life or term policy? Describe the key features of both policies and why and how you reached your conclusion. response should be at least 500 words

Suppose a life insurance company sells a $200,000 one-year term life insurance policy to a 23-year-old...

Suppose a life insurance company sells a $200,000 one-year term life insurance policy to a 23-year-old female for $190. The probability that the female survives the year is 0.999594. Compute and interpret the expected value of this policy to the insurance company.

Suppose a life insurance company sells a $160,000 one-year term life insurance policy to a 25-year-old...

Suppose a life insurance company sells a $160,000 one-year term life insurance policy to a 25-year-old female for $280. The probability that the female survives the year is 0.9996420 Compute and interpret the expected value of this policy to the insurance company. The expected value is $nothing. (Round to two decimal places as needed.)

Suppose a life insurance company sells a $190,000 one-year term life insurance policy to a 24-year-old...

Suppose a life insurance company sells a $190,000 one-year term life insurance policy to a 24-year-old female for $200. The probability that the female survives the year is .999461. Compute and interpret the expected value of this policy to the insurance company.

Suppose a life insurance company sells a $190,000 one-year term life insurance policy to a 20-year-old...

Suppose a life insurance company sells a $190,000 one-year term life insurance policy to a 20-year-old female for $330. The probability that the female survives the year is 0.999502. Compute and interpret the expected value of this policy to the insurance company.

Your company sells life insurance. You charge a 55 year old man $60 for a one...

Your company sells life insurance. You charge a 55 year old man $60 for a one year, $100,000 policy. If he dies over the course of the next year you pay out $100,000. If he lives, you keep the $60. Based on historical data (relative frequency approximation) the average 55 year old man has a 0.9998 probability of living another year. (a) What is your expected profit on this policy? (b) What is an accurate interpretation of this value? It...

Life Insurance: Your company sells life insurance. You charge a 55 year old man $60 for...

Life Insurance: Your company sells life insurance. You charge a 55 year old man $60 for a one year, $100,000 policy. If he dies over the course of the next year you pay out $100,000. If he lives, you keep the $60. Based on historical data (relative frequency approximation) the average 55 year old man has a 0.9995 probability of living another year. (a) What is your expected profit on this policy? $ (b) What is an accurate interpretation of...

A life insurance company sells a $250,000 1-year term life insurance policy to a 20-year old...

A life insurance company sells a $250,000 1-year term life insurance policy to a 20-year old male for $350. The probability this person survives the year is 0.98734. Compute the expected value of this policy to the insurance company to the nearest 0.01.

Question