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 thought I would start with x value of 1 - 12, but I'm lost on what my P(X=x) value will be. I can do these when I'm shown a chart, however I'm lost when asked to do them from a story problem... An example would be appreciated. Thank you in advance.
Compute the expected value of this policy to the insurance company.
I thought I would start with x value of 1 - 12, but I'm lost on what my P(X=x) value will be. I can do these when I'm shown a chart, however I'm lost when asked to do them from a story problem... An example would be appreciated. Thank you in advance.
