To calculate the insurance company's expectation, we need to multiply the probability of death by the policy payout and subtract the policy cost.
Probability of death: 0.069941
Policy payout: $10,000
Policy cost: $495
Expectation = (Probability of death * Policy payout) - Policy cost
Expectation = (0.069941 * $10,000) - $495
Expectation = $699.41 - $495
Expectation = $204.41
Therefore, the insurance company's expectation is $204.41.
the probability that an 80 year old male in the united states will die within one year is approximately 0.069941 if an insurance company sells a one year $10,000 life insurance policy to such a person for $495 what is the company’s expectation
1 answer
1 answer