Computing expected value of policy to insurance company.

[Katibug]

From this 2006 thread:

Suppose a life insurance company sells a $240,000 one year term life insurance policy to a 25-year old female for $210. The probability that the female survives the year is .999592.

Compute the expected value of this policy to the insurance company.

...I'm lost on what my P(X=x) value will be.

\(\displaystyle \left( {\$ 210} \right)\left( {0.999592} \right) - \left( {\$ 239790} \right)\left( {0.000408} \right)\)

I am struggling with a similar problem. How did you get (0.000408)

 

[stapel]

From this 2006 thread:

Suppose a life insurance company sells a $240,000 one year term life insurance policy to a 25-year old female for $210. The probability that the female survives the year is .999592.

Compute the expected value of this policy to the insurance company.

...I'm lost on what my P(X=x) value will be.

\(\displaystyle \left( {\$ 210} \right)\left( {0.999592} \right) - \left( {\$ 239790} \right)\left( {0.000408} \right)\)

I am struggling with a similar problem. How did you get (0.000408)

What did you get when you tried doing this?

Please be complete. Thank you!

 

[Dr.Peterson]

From this 2006 thread:


I am struggling with a similar problem. How did you get (0.000408)

It will help if you start by writing out the definition of expected value as you have been taught it. Please do that, and even if that doesn't trigger some useful thoughts on your part, it will give us a good starting place to discuss your question.