Question: Let x = 40, 8 = 0.07 and assume mortality follows DeMoivre's Law with a maximum age of 120. Determine the expected value and

Let x = 40, 8 = 0.07 and assume mortality follows DeMoivre's

Let x = 40, 8 = 0.07 and assume mortality follows DeMoivre's Law with a maximum age of 120. Determine the expected value and variance of the random variable Z40 for a whole life policy on this individual. Suppose now that 500 individuals of the type in question 1 buy insurance with a benefit of $250,000. Find the amount of money the insurer will need to hold to be 95% certain that the company will be able to pay the benefits to these individuals.

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To determine the expected value and variance of the random variable Z40 for a whole life policy on this individual we first need to understand DeMoivres Law DeMoivres Law models the distribution of th... View full answer

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