An insurance company sells a $10,000 one-year term life insurance policy to a customer at an annual premium of $290. According to their data, the probability of a person of this customer's age, sex, health, etc. dying in the next year is .001. What is the expected value for the company for a policy of this type? The expected value is That means the insurance company can expect to gain + $ on average, per year. Mathematically, would this be considered a "fair" deal between the insurance company and the customer? Yes +
An insurance company sells a $10,000 one-year term life insurance policy to a customer at an annual premium of $290. According to their data, the probability of a person of this customer's age, sex, health, etc. dying in the next year is .001. What is the expected value for the company for a policy of this type? The expected value is That means the insurance company can expect to gain + $ on average, per year. Mathematically, would this be considered a "fair" deal between the insurance company and the customer? Yes +
College Algebra
7th Edition
ISBN:9781305115545
Author:James Stewart, Lothar Redlin, Saleem Watson
Publisher:James Stewart, Lothar Redlin, Saleem Watson
Chapter9: Counting And Probability
Section9.3: Binomial Probability
Problem 33E: Sick leave probability that a given worker at Dyno Nutrition Will call in sick on a Monday is 004....
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Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
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Transcribed Image Text:An insurance company sells a $10,000 one-year term life insurance policy to a customer at
an annual premium of $290. According to their data, the probability of a person of this
customer's age, sex, health, etc. dying in the next year is .001. What is the expected value
for the company for a policy of this type?
The expected value is
That means the insurance company can expect to gain + $
on average, per
year.
Mathematically, would this be considered a "fair" deal between the insurance company
and the customer? Yes +
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