Problem #4 - Life Insurance A life insurance company sells $250,000 1-year term life insurance policy to a 20-year old for $200. According to the National Vital Statistics Report, the probability that a 20-year old survives the year is 0.999544. Compute the expected value for this policy.

Problem #4 - Life Insurance A life insurance company sells $250,000 1-year term life insurance policy to a 20-year old for $200. According to the National Vital Statistics Report, the probability that a 20-year old survives the year is 0.999544. Compute the expected value for this policy.

A First Course in Probability (10th Edition)

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

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Question

**Problem #4 – Life Insurance**

A life insurance company sells a $250,000 1-year term life insurance policy to a 20-year-old for $200. According to the National Vital Statistics Report, the probability that a 20-year-old survives the year is 0.999544. Compute the expected value for this policy.

Expert Solution

Step 1

Given Information:

A life insurance company sells $250,000 1-year term life insurance policy to a 20-year-old for $200.

Probability that a 20-year-old survives the year is 0.999544

Required: To compute the expected value for this policy.

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