# Suppose a person is looking for a one-year life insurance policy. They decide on a \$232994 policy. This policy costs \$291 per year. Suppose the probability the person dies in the year is 0.0006. Find the expected value of the policy for the insurance company. Give your answer as a decimal to at least two decimal places.

Question
12 views

Suppose a person is looking for a one-year life insurance policy. They decide on a \$232994 policy. This policy costs \$291 per year. Suppose the probability the person dies in the year is 0.0006. Find the expected value of the policy for the insurance company. Give your answer as a decimal to at least two decimal places.

check_circle

Step 1

Probability of dying =0.0006

Probability of not dying = 1-0.0006 =0.9994

Net profit to company if person dies = -\$232994 +\$291

Net profit to company if person does not die = \$291

Step 2

Expected value can be calcul...

### Want to see the full answer?

See Solution

#### Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in