To calculate the insurance company's expectation, we need to multiply the probability of the event occurring (the person dying) by the amount the company receives (the premium) and subtract the amount the company pays out (the face value of the policy).
Exp = (Probability of event) * (Amount received) - (Amount paid out)
Given:
Probability of event = 0.069941
Amount received = $485
Amount paid out = $10,000
Exp = 0.069941 * $485 - $10,000
Exp = $33.98 - $10,000
Exp = -$9,966.02
The insurance company's expectation is -$9,966.02. This means that, on average, the insurance company can expect to lose nearly $9,966 when they sell this life insurance policy to an 80-year-old male in the U.S.