3. Highspirit Shoemaker offers medical insurance for its employees. Its probability distribution formedical costs for the coming year is as follows:so with probability 0.9335$2000 with probability 0.0500Medical costs $5,000 with probability 0.0100S10,000 with probability 0.0050S50,000 with probability 0.0010$500,000 with probability 0.0005Calculate Highspirit's claim cost for each of the following policies:a. full insuranceb. $5,000 deductible and a $200,000 limitc. $5,000 deductible, 20% coinsurance, and a $200,000 limit

a. Probability Amount medical cost 0.93335 $0 0 0.05 $2,000 100 0.01 $5,000 50 0.005…

Answered: Calculate Highspirit's claim cost for…

Calculate Highspirit's claim cost for each of the following policies: a. full insurance b. $5,000 deductible and a $200,000 limit c. $5,000 deductible, 20% coinsurance, and a $200,000 limit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

3. Highspirit Shoemaker offers medical insurance for its employees. Its probability distribution for
medical costs for the coming year is as follows:
so with probability 0.9335
$2000 with probability 0.0500
Medical costs $5,000 with probability 0.0100
S10,000 with probability 0.0050
S50,000 with probability 0.0010
$500,000 with probability 0.0005
Calculate Highspirit's claim cost for each of the following policies:
a. full insurance
b. $5,000 deductible and a $200,000 limit
c. $5,000 deductible, 20% coinsurance, and a $200,000 limit

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