Consider an individual who faces uncertainty about their health in the future. Health can be good with probability 94%, bad with probability 5%, and really ugly with probability 1%. C=100,000 is consumption with good health, C=50,000 is consumption with bad health, and C=0 is consumption with really ugly health. Utility is U=C. What is the actuarially fairly priced insurance that will compensate fully for the loss? Should the person buy the health insurance if fairly priced? No Yes They should only buy partial coverage in this case. They should only buy insurance if the loss is greater than or equal to $100,000. Consider an individual who faces uncertainty about their health in the future. Health can be good with probability 94%, bad with probability 5%, and really ugly with probability 1%. C=100,000 is consumption with good health, C=50,000 is consumption with bad health, and C=0 is consumption with really ugly health. Utility is U=C. What is the actuarially fairly priced insurance that will compensate fully for the loss? Should the person buy the health insurance if fairly priced? No Yes They should only buy partial coverage in this case. They should only buy insurance if the loss is greater than or equal to $100,000