The probability that an 80-year-old male in the U.S. will die within one year is approximately...

The probability that an 80-year-old male in the U.S. will die within one year is approximately 0.069941. If an insurance company sells a one-year, $12,000 life insurance policy to such a person for $425, what is the company's expectation? (Round your answer to two decimal places.)

Solutions

Expert Solution

Probability of death = 0.069941

Probability of survival = 1 - 0.069941 = 0.930059

Company's expectation value = 0.930059 * 425 - 12000 * 0.069941

= -444.02

Rahul Sunny answered 1 year ago

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