Suppose a life insurance company sells a $200,000 1-year term life insurance policy to a 20-year-old female for $300. According to the Nationa Vital Statistics Report, 58(21), the probability that the female survives the year is 0.999544. Compute and interpret the expected value of this policy to the insurance company. The expected value is S (Round to the nearest cent as needed.) Which of the following interpretations of the expected value is correct? Select the correct choice below and fill in the answer box to complete your choice. (Round to the nearest cent as needed.) O A. The insurance company expects to make a maximum profit of $ on every 20-year-old female it insures for 1 year. O B. The insurance company expects to make a profit of $ on every 20-year-old female it insures for 1 month. O C. The insurance company expects to make a minimum profit of S on every 20-year-old female it insures for 1 month. O D. The insurance company expects to make a profit of $ on every 20-year-old female it insures for 1 year.

Suppose a life insurance company sells a $200,000 1-year term life insurance policy to a 20-year-old female for $300. According to the Nationa Vital Statistics Report, 58(21), the probability that the female survives the year is 0.999544. Compute and interpret the expected value of this policy to the insurance company. The expected value is S (Round to the nearest cent as needed.) Which of the following interpretations of the expected value is correct? Select the correct choice below and fill in the answer box to complete your choice. (Round to the nearest cent as needed.) O A. The insurance company expects to make a maximum profit of $ on every 20-year-old female it insures for 1 year. O B. The insurance company expects to make a profit of $ on every 20-year-old female it insures for 1 month. O C. The insurance company expects to make a minimum profit of S on every 20-year-old female it insures for 1 month. O D. The insurance company expects to make a profit of $ on every 20-year-old female it insures for 1 year.

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Description: **Life Insurance Expected Value Calculation for a 20-Year-Old Female**Suppose a life insurance company sells a $200,000 1-year term life insurance policy to a 20-year-old female for $300. According to the National Vital Statistics Report, 58(21), th

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Concept explainers

Contingency Table

A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.

Binomial Distribution

Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.

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Question

**Life Insurance Expected Value Calculation for a 20-Year-Old Female**

Suppose a life insurance company sells a $200,000 1-year term life insurance policy to a 20-year-old female for $300. According to the National Vital Statistics Report, 58(21), the probability that the female survives the year is 0.999544. Compute and interpret the expected value of this policy to the insurance company.

### The Expected Value Calculation

**The expected value is $____.**
(Round to the nearest cent as needed.)

### Interpretation of the Expected Value

Which of the following interpretations of the expected value is correct? Select the correct choice below and fill in the answer box to complete your choice.
(Round to the nearest cent as needed.)

- **Option A:** The insurance company expects to make a maximum profit of $____ on every 20-year-old female it insures for 1 year.
- **Option B:** The insurance company expects to make a profit of $____ on every 20-year-old female it insures for 1 month.
- **Option C:** The insurance company expects to make a minimum profit of $____ on every 20-year-old female it insures for 1 month.
- **Option D:** The insurance company expects to make a profit of $____ on every 20-year-old female it insures for 1 year.

**Note:** The detailed expected value calculation would typically involve understanding the survival and death probabilities and how they impact the insurance payout and profit margins for the company.

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