Question

16. A 40-year-old man in the U.S. has a 98.1% of surviving during the next year. An insurance company charges $290 per year for a life insurance policy that pays a $70000 death benefit. a) (4 pts) Create a probability distribution b) (3 pts) What is the expected value for the table insurance company? Round your answer to the nearest cent.

Answer 1

let X: feepesteed Value ofor the insurance coverpany. @ P(x=$290)- 98.1%-0.981 -69710 P(X= $290-70000) = 1-0.981-0.019 POO| 0.981 0.019 X 290 © Ecx)= "EX.P(x) = 290(0,981)- 69710(0,019) = $ 1040 I loss of $ 1040 arg, pes policy)