An insurance company sells a $10,000 one-year term life insurance poli

vomiderawo

vomiderawo

Answered question

2021-12-07

An insurance company sells a $10,000 one-year term life insurance policy to a customer at an anuual premium of $290. According to their data, the probability of a person of this customers

Answer & Explanation

tnie54

tnie54

Beginner2021-12-08Added 18 answers

We have data, 
The amount of insurance is $10000. 
The amount of premium is $290. 
The probability that the person die in next year is 0.001. 
Step 1 
Here, 
The amount of insurance is $10000. 
The amount of premium is $290. 
The likelihood of the person passing away in the upcoming year is 0.001.
The likelihood that the individual won't pass away in the upcoming year is
P(¬ die)=10.001 
=0.999 
The expected value is, 
E(X)=290×0.999(10000290)×0.001 
=289.719.71 
=280 
Step 2 
That indicates that the insurance provider can anticipate a gain of $280 on average each year.
Yes, the business and the customer have a fair agreement.

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