document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=271159>Question 271159</A>: <I><SPAN STYLE=\"word-break: break-all;\"> A 65 year old woman takes out a $100,000 term life insurance policy.  The company charges an annual premium of $520.  Estimate the company’s expected profit on such policies if the mortality tables indicate that only 2.6% of women age 65 die within a year. </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #198557 by </B><A HREF=/tutors/aboutme.mpl?userid=stanbon><B>stanbon(75887)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=stanbon><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/images/nopicture.jpg><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=198557\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> A 65 year old woman takes out a $100,000 term life insurance policy.  The company charges an annual premium of $520.  Estimate the company’s expected profit on such policies if the mortality tables indicate that only 2.6% of women age 65 die within a year.\r<BR>\n" );
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document.write( "Random profit values: -99,480, +520<BR>\n" );
document.write( "Probabilities: 0.026, 0.974<BR>\n" );
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document.write( "E(profit) = 0.026(-99480) + 0.974(520) = -$2080<BR>\n" );
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document.write( "Cheers,<BR>\n" );
document.write( "Stan H. </SPAN>\n" );
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