Question

A term life insurance policy will pay a beneficiary a certain sum of money upon the death of the policyholder. These policies have premiums that must be paid annually. Suppose a life insurance company sells a $200,000 one-year term life insurance policy to a 49-year-old female for $620. According to the National Vital Statistics Report, Vol. 47, No. 28, the probability the female will survive the year is 0.997. (a) Compute the expected profit to the insurance company for selling such a policy. (b) Interpret the value of expected profit in (a) in the context of the problem.

          A term life insurance policy will pay a beneficiary a certain sum of money upon the death of the policyholder. These policies have premiums that must be paid annually. Suppose a life insurance company sells a $200,000 one-year term life insurance policy to a 49-year-old female for $620. According to the National Vital Statistics Report, Vol. 47, No. 28, the probability the female will survive the year is 0.997.

(a) Compute the expected profit to the insurance company for selling such a policy.
(b) Interpret the value of expected profit in (a) in the context of the problem.

A term life insurance policy will pay a beneficiary a certain sum of money upon the death of the policyholder. These policies have premiums that must be paid annually. Suppose a life insurance company sells a 200,000 one-year term life insurance policy to a 49-year-old female for620. According to the National Vital Statistics Report, Vol. 47, No. 28, the probability the female will survive the year is 0.997.

(a) Compute the expected profit to the insurance company for selling such a policy.
(b) Interpret the value of expected profit in (a) in the context of the problem.

Added by Erik A.

Question

Please give Ace some feedback