An insurance company is going to charge 654 for a 1year 1600

An insurance company is going to charge $654 for a 1-year $160000 policy for women who don\'t smoke and are 55 years old. The probability that this group of women will die in the next year is 0.0039.

What is the probability of this group of women living? (write as a decimal, not a %, rounded to 4 decimal places)

What is the Expected Value of this policy for the insurance company? $--------- per policy

How much money would 1200 policies like this generate for the insurance company? $-----------

Solution

A) THE PROBABILITY THAT THE GROUP OF WOMEN WILL DIE IN 0.0039

NOW THE PROBABILITY IS THAT THE GROUP OF WOMEN WILL LIVE IS 1 - 0.0039 = 0.9961

B) EXPECTED VALUE OF THIS POLICY = 0.0039* 654 = 2.55

C) 1200 * 654 = 784800 IS THE MONEY GENERATED