SOLUTION: A 40-year-old man in the U.S. has a 0.24% risk of dying during the next year . An insurance company charges $290 per year for a life-insurance policy that pays a $100,000 death ben
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Question 1195673: A 40-year-old man in the U.S. has a 0.24% risk of dying during the next year . An insurance company charges $290 per year for a life-insurance policy that pays a $100,000 death benefit. What is the expected value for the person buying the insurance? Round your answer to the nearest dollar.
Expected Value: $
for the year Answer by ikleyn(52776) (Show Source):
The expected value for a person buying the insurance is
0.0024*10000 - 290 = -50 dollars. ANSWER
He (or she) pays to the insurance company 50 dollars this year for peace in his (or her) mind.
