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A term life insurance policy will pay the beneficiary a certain sum of money upon the death of the policy holder. These policies have premiums
A term life insurance policy will pay the beneficiary a certain sum of money upon the death of the policy holder. These policies have premiums that must be paid annually. Suppose an 18-year-old man purchases a $ 220,000 1-year life insurance policy for $ 750. According to the National Vital Statistics Report, the probability that the man will survive the year is 0.99736.
1. Calculate the probability that the man dies during the year:
2. Calculate the expected value of this policy to the insurance company:
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