Question
An insurance company offers a policy with a death benefit of $250,000. The policy has a 10-year term, and the annual premium is $1,200, payable
An insurance company offers a policy with a death benefit of $250,000. The policy has a 10-year term, and the annual premium is $1,200, payable at the beginning of each year. The probability of a policyholder dying within the policy term is 0.02. If the insurance company invests premiums at an annual interest rate of 5%, what is the expected profit for the insurance company per policy?
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Statistics For Business Decision Making And Analysis
Authors: Robert Stine, Dean Foster
2nd Edition
978-0321836519, 321836510, 978-0321890269
