Sara is a 60-year-old Anglo female in reasonably good health. She wants to take out a $50,000 term (that is, straight death benefit) life insurance policy until she is 65. The policy will expire on her 65th birthday. The probability of death in a given year is provided by the Vital Statistics Section of the Statistical Abstract of the United States (116th Edition).      (b) What would be the total expected cost to Big Rock Insurance over the years 60 through 64?   (c) If Big Rock Insurance wants to make a profit of $700 above the expected total cost paid out for Sara's death, how much should it charge for the policy?   (d) If Big Rock Insurance Company charges $5000 for the policy, how much profit does the company expect to make?

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Estimation

A new framework of data analysis where the new statistical methods are used for interpreting the results and analyzing the data is known as estimation in statistics.