An insurance company sets its annual premium on its life insurance policies so that it makes an expected profit of 1 percent of the amount it would have to pay out upon death. Find the annual premium on a $200,000 life insurance policy for an individual who will die during the year with probability 0.02.
Added by David F.
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Expected profit = 0.01 * $200,000 = $2,000 Show more…
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