Sam is applying for a single year life insurance policy worth $25,700.00. If the actuarial tables determine that he will survive the next year with probability 0.99, what is the expected value for the life insurance if the premium is $362.00?
I am not sure if this is right, I just searched up how to do this kind of problem.
: Find the expected value of life insurance if the premium is $362.00
Do (362) * (0.99) - (25700) * (0.01)
The answer will be:
(362)*(0.99)-(25700)*(0.01) = 101.38
Maybe $105? I had to loOk this one up also....but the example I found may be incorrect...
362(.99) -(25700-362)(.01) = $ 105
I honestly got -162.something, then retried and got 56... so I came here... And I was wrong both counts... Nobody on the internet agrees with me...
There must be a concrete way to do this...
I have never seen this type of problem before, it is quite strange.