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In: Statistics and Probability

Sam is applying for a single year life insurance policy worth $60,900.00. If the actuarial tables...

Sam is applying for a single year life insurance policy worth $60,900.00. If the actuarial tables determine that she will survive the next year with probability 0.996 , what is her expected value for the life insurance policy if the premium is $331.00 ?

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Expert Solution

Expected money that company will pay of Sam dies = 60,900*0.004 = $ 243.6

Premium = $331

Sk Expected profit from each such type of policy = 331-243.6 =$87.4

orchestra answered 2 years ago
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