Life insurance money A life insurance company sells a term insurance policy to a 21-year-old male that pays $100,000 if the insured die within the following 5 years. The probability that a randomly favored male will certainly die each year can be uncovered in mortality tables. The firm collects a premium the $250 every year as payment for the insurance. The quantity Y the the firm earns top top this policy is $250 per year, less the $100,000 that it should pay if the insured dies. Below is a partly completed table that shows information about risk the mortality and the worths of Y = profit earned through the company:

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(a) describe why the agency suffers a lose of $98,750 on together a policy if a client dies at age 25.

You are watching: A life insurance company sells a term insurance policy to a 21-year-old male

(b) uncover the missing probability. Show your work.

(c) calculation the average mY. Interpret this value in context.

 


jan 25 2021 07:32 pm

1 authorized Answer


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Priyanka reply on January 27, 2021
5 Ratings, (11 Votes)
1) If a customer dies at period 25, he has actually paid to the firm premium that $250 because that 5 years each which is a complete of 250*5 = $1250

The company pays $100,000 on his death. So...
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