Question: Expected value for life insurance There is a 0.9968 probability that a

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Question: Expected value for life insurance                           There is a 0.9968 probability that a randomly selected 50-year-oldfemale lives through the year. A fidelity life insurance companycharges $226 for insuring that the female will live through theyear. If she does not survive the year, the policy pays out $50.000as a death benefit. a) From the perspective of the 50-year-old female, whatare the values corresponding to the two events of surviving theyear and not surviving? b) If a 50-year-old female purchases the policy, whatis her exact value? c) Can the insurance company expect to make a profitfrom many such policies? Why? Please i need help on this question. Show step-stepworking please. Question: Expected value for life insurance                           There is a 0.9968 probability that a randomly selected 50-year-oldfemale lives through the year. A fidelity life insurance companycharges $226 for insuring that the female will live through theyear. If she does not survive the year, the policy pays out $50.000as a death benefit. a) From the perspective of the 50-year-old female, whatare the values corresponding to the two events of surviving theyear and not surviving? b) If a 50-year-old female purchases the policy, whatis her exact value? c) Can the insurance company expect to make a profitfrom many such policies? Why? Please i need help on this question. Show step-stepworking please.                           There is a 0.9968 probability that a randomly selected 50-year-oldfemale lives through the year. A fidelity life insurance companycharges $226 for insuring that the female will live through theyear. If she does not survive the year, the policy pays out $50.000as a death benefit. a) From the perspective of the 50-year-old female, whatare the values corresponding to the two events of surviving theyear and not surviving? b) If a 50-year-old female purchases the policy, whatis her exact value? c) Can the insurance company expect to make a profitfrom many such policies? Why? Please i need help on this question. Show step-stepworking please.

Explanation / Answer

a) The Lives is : -226 dollars(a loss) and dies: 49774(again) b) The 50-year-old female purchases the policy, what is her exactvalue is -66. c) Yes, the company expect to make a cost of the insurancepolicy if the company just breaks even the long run with manysuch policies of 160.

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