Question
An insurance company sells a life insurance policy that pays out $500,000 if the policyholder dies within the next 10 years. The company charges an
An insurance company sells a life insurance policy that pays out $500,000 if the policyholder dies within the next 10 years. The company charges an annual premium of $1,500 for this policy. The probability that a 30-year-old policyholder will die within the next 10 years is 0.02. If the insurance company sells this policy to 1,000 individuals, what is the expected profit or loss for the insurance company?
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Quantitative Analysis For Management
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