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Based on US mortality statistics, the probability that a 30-year old white female will die within...

Based on US mortality statistics, the probability that a 30-year old white female will die within the next year is 0.000642 (and so the probability of living another year is 1-0.000642 = 0.999358). What premium should a life insurance company charge to break even on a $500,000 one-year term insurance policy for a 30-year old white female? Please select the closest response.

260
290
351
231
321

Solutions

Expert Solution

the probability that a 30-year old white female will die within the next year is 0.000642

Insurance amount = $ 500,000

Hence, break even premium = probability of death x Sum insured = 0.000642 x 500,000 = $ 321

Hence, the correct answer is the last option showing 321.

jeff jeffy answered 2 years ago
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