Question 384392
the probability that an american dies citizen in his 20th year is 0.00178. assume that a life insurance company will sell a $1000 one year policy to 
a 19 year old for $5.
what is expected gain obtained by insurance company from selling one such 
a policy?
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Let the "gain" for the company be "x":
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x values are $5 and -$995
probabilities are (1-0.00178) and 0.00178
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E(x) = 0.99822*5 + 0.00178*(-995) = $3.22
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Cheers,
Stan H.