An insurance company has written 50 policies for 125000 100

An insurance company has written 50 policies for 125,000, 100 policies for 20,000 and 250...

An insurance company has written 50 policies for $125,000, 100 policies for $20, 000, and 250 policies for $7500 for people of age 20. If experience shows that the probability that a person will die at age 20 is 0.0012, how much can the company expect to pay out during the year the policies were written? The company can expect to pay out over the year after the policies were written.

Solution

n

A

p

n*A*p

50

125000

0.0012

7500

100

20000

0.0012

2400

250

7500

0.0012

2250

Total

12150

The company expect to pay out $ 12150

n	A	p	n*A*p
50	125000	0.0012	7500
100	20000	0.0012	2400
250	7500	0.0012	2250
		Total	12150