The probability that a 55-year-old white male will live another year is .99251. What premium would...

The probability that a 55-year-old white male will live another year is .99251. What premium would an insurance company charge to break even on a one-year $1 million term life insurance policy?

Expert Solution

The probability that the man will die in1 year = 1-0.99251

= 0.00749

Expected value of payment by insurance company = Payment * Probability

=1000000* 0.00749 + 0*0.99251

=$ 7490

Hence premium should be $7490

jeff jeffy answered 2 years ago

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