Answer to Question #208622 in Statistics and Probability for hassan

Question

Life Insurance A 35-year-old woman purchases a

$100,000 term life insurance policy for an annual payment

of $360. Based on a period life table for the U.S.

government, the probability that she will survive the

year is 0.999057. Find the expected value of the policy

for the insurance company.

Answer 1

$E(X)=0.999057*360-(1-0.999057)*(100000-360)=\$265.70.$