“A young man, age 21, may purchase a term-to-age-

65 policy. The probability that he will die and the insurance company will be required to pay the face amount of the policy is about 12 percent. If he could purchase a term-to-age-75 contract, the probability the company would be required to pay the face amount of the policy increases to 27 percent. Protection to age 85 involves a probability of 53 percent.” Reflecting on the rules of risk management discussed in Chapter 3, what conclusions can one draw concerning the purchase of benefit-certain contracts?