An insurance company sells an insurance policy to individuals for $1,000 per year. If the person dies that year, then the insurance company will pay the family $100,000. If the person becomes disabled and unable to work that year, then the insurance company will pay the family $50,000. Actuaries at the insurance company estimate that 1 out of 1,000 policy holders will die each year, and 2 out of 1,000 policy holders will become disabled. What is the expected profit per person per year for the insurance company?
An insurance company sells an insurance policy to individuals for $1,000 per year. If the person dies that year, then the insurance company will pay the family $100,000. If the person becomes disabled and unable to work that year, then the insurance company will pay the family $50,000. Actuaries at the insurance company estimate that 1 out of 1,000 policy holders will die each year, and 2 out of 1,000 policy holders will become disabled. What is the expected profit per person per year for the insurance company?
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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An insurance company sells an insurance policy to individuals for $1,000 per year. If the person dies that year, then the insurance company will pay the family $100,000. If the person becomes disabled and unable to work that year, then the insurance company will pay the family $50,000. Actuaries at the insurance company estimate that 1 out of 1,000 policy holders will die each year, and 2 out of 1,000 policy holders will become disabled. What is the expected profit per person per year for the insurance company?
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