A 40 year old man in the United States has a 0.199% risk of dying during the next year. An insurance company charges a premium of $429 pays a $166,010 death benefit. What is the expected gain or loss to the man when for a life-insurance policy that purchasing the insurance policy? Hint: Calculate the expected loss of the premium if the man survives (always a negative value), then subtract the premium from the death benefit and calculate the expected gain to the beneficiarles If the man dies (always a positive value), and then add these two numbers to find the net result. A negative net result should be entered as a negative value In the box below. Note: Please avold rounding numbers in the middle of your calculations. However, round your final answer to two decimal places, before enterlng it in the box below. A negative final answer Indicates an expected loss for purchasing the policy.
A 40 year old man in the United States has a 0.199% risk of dying during the next year. An insurance company charges a premium of $429 pays a $166,010 death benefit. What is the expected gain or loss to the man when for a life-insurance policy that purchasing the insurance policy? Hint: Calculate the expected loss of the premium if the man survives (always a negative value), then subtract the premium from the death benefit and calculate the expected gain to the beneficiarles If the man dies (always a positive value), and then add these two numbers to find the net result. A negative net result should be entered as a negative value In the box below. Note: Please avold rounding numbers in the middle of your calculations. However, round your final answer to two decimal places, before enterlng it in the box below. A negative final answer Indicates an expected loss for purchasing the policy.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A 40 year old man in the United States has a 0.199% risk of dying during the next
year. An insurance company charges a premium of $429
pays a $166,010 death benefit. What is the expected gain or loss to the man when
for a life-insurance policy that
purchasing the insurance policy?
Hint: Calculate the expected loss of the premium if the man survives (always a negative
value), then subtract the premium from the death benefit and calculate the expected gain
to the beneficiarles if the man dies (always a positive value), and then add these two
numbers to find the net result. A negative net result should be entered as a negative value
In the box below.
Note: Please avold rounding numbers in the middle of your calculations. However, round your
final answer to two decimal places, before entering it in the box below. A negative final answer
indicates an expected loss for purchasing the policy.
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