Insurance Costs

You just purchased a life insurance policy for $250 per year ($20.83 per month). The policy pays a death benefit of $750,000 in the event of your untimely death. The probability of you dying in a given year for your age bracket is 5 per 10,000.

1. What is the expected value of your policy if you die?

1. What is the expected value of the policy to the insurance company?

1. How much profit/loss does the insurance company earn if they sell ten thousand policies like yours?