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
icon
Related questions
Question

Hello, can you please help me solve this problem? Write clearly and neatly on a paper. Upload it here. Thank you

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?

 

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
Recommended textbooks for you
Advanced Engineering Mathematics
Advanced Engineering Mathematics
Advanced Math
ISBN:
9780470458365
Author:
Erwin Kreyszig
Publisher:
Wiley, John & Sons, Incorporated
Numerical Methods for Engineers
Numerical Methods for Engineers
Advanced Math
ISBN:
9780073397924
Author:
Steven C. Chapra Dr., Raymond P. Canale
Publisher:
McGraw-Hill Education
Introductory Mathematics for Engineering Applicat…
Introductory Mathematics for Engineering Applicat…
Advanced Math
ISBN:
9781118141809
Author:
Nathan Klingbeil
Publisher:
WILEY
Mathematics For Machine Technology
Mathematics For Machine Technology
Advanced Math
ISBN:
9781337798310
Author:
Peterson, John.
Publisher:
Cengage Learning,
Basic Technical Mathematics
Basic Technical Mathematics
Advanced Math
ISBN:
9780134437705
Author:
Washington
Publisher:
PEARSON
Topology
Topology
Advanced Math
ISBN:
9780134689517
Author:
Munkres, James R.
Publisher:
Pearson,