Question

Jim is a 60-year-old Anglo male in reasonably good health. He wants to take out a...

Jim is a 60-year-old Anglo male in reasonably good health. He wants to take out a $50,000 term (that is, straight death benefit) life insurance policy until he is 65. The policy will expire on his 65th birthday. The probability of death in a given year is provided by the Vital Statistics Section of the Statistical Abstract of the United States (116th Edition).

x = age 60 61 62 63 64
P(death at this age) 0.01087 0.01420 0.01630 0.01960 0.02206

Jim is applying to Big Rock Insurance Company for his term insurance policy.

(a) What is the probability that Jim will die in his 60th year? (Enter your answer to five decimal places.)


Using this probability and the $50,000 death benefit, what is the expected cost to Big Rock Insurance? (Round your answer to two decimal places.)
$

(b) Repeat part (a) for years 61, 62, 63, and 64. (Round your answers to two decimal places.)
Year Expected Cost
61 $
62 $
63 $
64 $

What would be the total expected cost to Big Rock Insurance over the years 60 through 64? (Round your answer to two decimal places.)
$

(c) If Big Rock Insurance wants to make a profit of $700 above the expected total cost paid out for Jim's death, how much should it charge for the policy? (Round your answer to two decimal places.)
$

(d) If Big Rock Insuran
0 0
Add a comment Improve this question Transcribed image text
Know the answer?
Add Answer to:
Jim is a 60-year-old Anglo male in reasonably good health. He wants to take out a...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Jim is a 60-year-old Anglo male in reasonably good health. He wants to take out a...

    Jim is a 60-year-old Anglo male in reasonably good health. He wants to take out a $50,000 term (i.e., straight death benefit) life insurance policy until he is 65. The policy will expire on his 65th birthday. The probability of death in a given year is provided. x = age 60 61 62 63 64 P(death at this age) 0.01078 0.01441 0.016510.02065 0.02236 Jim is applying to Big Rock Insurance Company for his term insurance policy. (a) What is the...

  • Jim is a 60-year-old Anglo male in reasonably good health. He wants to take out a...

    Jim is a 60-year-old Anglo male in reasonably good health. He wants to take out a $50,000 term (i.e., straight death benefit) life insurance policy until he is 65. The policy will expire on his 65th birthday. The probability of death in a given year is provided. x = age 60 61 62 63 64 P(death at this age) 0.01180 0.01438 0.01780 0.01909 0.02209 Jim is applying to Big Rock Insurance Company for his term insurance policy. (a) What is...

  • lim is a 60 year old Anglo male in reasonably good health. He wants to take...

    lim is a 60 year old Anglo male in reasonably good health. He wants to take out a $50,000 term that is, straight death benefit) life insurance policy until he is 65. The policy will expire on his oth birthday. The probability of death in a given year is provided by the Vital Statistics Section of the Statistical Abstract of the United States (116th Edition) 60 death at this age 2012 Jim is applying to Big Rock Insurance Company for...

  • Jim is a 60-year-old male in reasonably good health. He wants to take out a $75,000...

    Jim is a 60-year-old male in reasonably good health. He wants to take out a $75,000 term (that is, straight death benefit) life insurance policy until he is 65. The policy will expire on his 65th birthday. The probability of death in a given year is provided by the Vital Statistics Section of the Statistical Abstract of the United States (116th edition) X=age 60 61 62 63 64 P(death at this age) 0.01091 0.01192 0.01296 0.01403 0.01513 Jim is applying...

  • Sara is a 60-year-old Anglo female in reasonably good health. She wants to take out a...

    Sara is a 60-year-old Anglo female in reasonably good health. She wants to take out a $50,000 term (i.e., straight death benefit) life insurance policy until she is 65. The policy will expire on her 65th birthday. The probability of death in a given year is provided. 63 64 X = age 60 61 62 P(death at this age) 1 0.00607 0.00803 0.00875 0.01062 0.01165 Sara is applying to Big Rock Insurance Company for her term insurance policy. (a) What...

  • Sara is a 60-year-old Anglo female in reasonably good health. She wants to take out a...

    Sara is a 60-year-old Anglo female in reasonably good health. She wants to take out a $50,000 term (i.e., straight death benefit) life insurance policy until she is 65. The policy will expire on her 65th birthday. The probability of death in a given year is provided. x = age 60 61 62 63 64 P(death at this age) 0.00610 0.00968 0.00809 0.00945 0.01060 Sara is applying to Big Rock Insurance Company for her term insurance policy. (a) What is...

  • There is a 0.9988 probability that a randomly selected 27​-year-old male lives through the year. A...

    There is a 0.9988 probability that a randomly selected 27​-year-old male lives through the year. A life insurance company charges ​$170 for insuring that the male will live through the year. If the male does not survive the​ year, the policy pays out ​$120,000 as a death benefit. Complete parts​ (a) through​ (c) below. a. From the perspective of the 2727​-year-old ​male, what are the monetary values corresponding to the two events of surviving the year and not​ surviving?The value...

  • There is a 0.9958 probability that a randomly selected 28-year-old male lives through the year. A...

    There is a 0.9958 probability that a randomly selected 28-year-old male lives through the year. A life insurance company charges $172 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out $120,000 as a death benefit Complete parts (a) through (c) below. a. From the perspective of the 28-year-old male, what are the monetary values corresponding to the two events of surviving the year and not surviving? The...

  • There is a 0.9989 probability that a randomly selected 29-year-old male lives through the year. A...

    There is a 0.9989 probability that a randomly selected 29-year-old male lives through the year. A life insurance company charges $197 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out $100,000 as a death benefit. Complete parts (a) through (c) below. a. From the perspective of the 29-year-old male, what are the monetary values corresponding to the two events of surviving the year and not surviving? The...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT