SOLUTION: A 31-year-old woman purchases a 200,000 term life insurance policy for an annual payment of $400. Based on a period life table for the U.S. government, the probability that she wi

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Question 1202907: A 31-year-old woman purchases a 200,000 term life insurance policy for an annual payment of $400. Based on a period life table for the U.S. government, the probability that she will survive the year is 0.999053 . Find the expected value of the policy for the insurance company. Round to two decimal places for currency problems.
The expected value of the policy for the insurance company is:
Answer by ikleyn(52756) About Me  (Show Source):
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A 31-year-old woman purchases a 200,000 term life insurance policy for an annual payment of $400.
Based on a period life table for the U.S. government, the probability that she will survive
the year is 0.999053 . Find the expected value of the policy for the insurance company.
Round to two decimal places for currency problems.
The expected value of the policy for the insurance company is:
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= 400 - 200000*(1-0.999053) = 210.6 dollars.             ANSWER


Solved.

The logic of the solution is clear from the structure of the formula.