An insurance company is going to charge $720 for a 1-year $150000 policy for wom

Question

An insurance company is going to charge $720 for a 1-year $150000 policy for women who don't smoke and are 44 years old. The probability that this group of women will die in the next year is 0.0046.

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

(2) What is the Expected Value of this policy for the insurance company? $------------per policy.

(3) How much money would 2200 policies like this generate for the insurance company? $-----------------.

Explanation / Answer

1) Probability of this group of women living = 1-P(dying) = 1-0.0046 = 0.9954

2)Expected value of policy= P(dying)*insured money = 0.0046*150000 = $ 690

3) Money made by company for 2200 policies = (720-690)*2200 = $ 66000

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