Consider a standard health insurance policy with a premium r = $100 and a payout of q = $500. (a) If your healthy-state income is
Consider a standard health insurance policy with a premiumr =$100 and a payout ofq =$500.
(a)If your healthy-state income isYH=$500, your sick-state income isYS=$50, and your probability of illness isp =0.1, is the standard contract full and actuarily fair? What is your final income if you get sick?
(b)IfYH= $1,000andYS=$0 with a probability of illnessp =0.2, is the standard contract full and fair?
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Authors: Roger A. Arnold
11th edition
1133561675, 978-1133561675
