A man wishes to purchase a life insurance policy that will pay the beneficiary $15,000 in the event that the man's death occurs during the next year. Using life insurance tables, he determines that the probability that he will live another year is 0.97. What is the minimum amount that he can expect to pay for his premium? Hint: The minimum premium occurs when the insurance company's expected profit is zero. $

Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter10: Sequences, Series, And Probability
Section10.8: Probability
Problem 68E
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A man wishes to purchase a life insurance policy that will pay the beneficiary $15,000 in the event that the man's death occurs during the next year. Using life
insurance tables, he determines that the probability that he will live another year is 0.97. What is the minimum amount that he can expect to pay for his premium?
Hint: The minimum premium occurs when the insurance company's expected profit is zero.
$
Transcribed Image Text:A man wishes to purchase a life insurance policy that will pay the beneficiary $15,000 in the event that the man's death occurs during the next year. Using life insurance tables, he determines that the probability that he will live another year is 0.97. What is the minimum amount that he can expect to pay for his premium? Hint: The minimum premium occurs when the insurance company's expected profit is zero. $
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