# 25. Life Insurance A life insurance company sells a \$250,0001-year term life insurance policy to a 20-year-old female for\$200. According to the National Vital Statistics Report, 58(21)the probability that the female survives the year is 0.999544Compute and interpret the expected value of this policy to theinsurance company26. Life Insurance A life insurance company sells a \$250,000 1-yearterm life insurance policy to a 20-year-old male for \$350.Accordingto the National Vital Statistics Report, 58(21), the probability thatthe male survives the year is 0.998734. Compute and interpret theexpected value of this policy to the insurance company.27. BlackJack BlackJack is a popular casino game in which aplayer is dealt two cards where the value of the card correspondsto the number on the card, face cards are worth ten, and aces areworth either one or eleven. The object is to get as close to 21 aspossible without going over and have cards whose value exceedsthat of the dealer. A blackjack is an ace and a ten in two cards. Itpays 1.5 times the bet. The dealer plays last and must draw a cardwith sixteen and hold with seventeen or more. The followingdistribution shows the winnings and probability for a \$20 bet.In cases where the dealer and player have the same value, thereis a tie (called a "push"). Source: "Examining a Gambler's Claims:Probabilistic Fact-Checking and Don Johnson's Extraordinary WinningStreak" by W.J. Hurley, Jack Brimberg, and Richard Kohar. Chance Vol.271, 2014.WinningsProbability00.0982\$300.0483\$200.389275-\$200.464225

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Asked Oct 3, 2019
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It is provided that the probability of a female survives a year is 0.999544. Therefore, the probability of not surviving is 1 – probability of surviving = 1 – 0.999544 = 0.000456.

Step 2

Consider the below table,

Step 3

The expected value of the polic...

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