Joe Barton, sales manager of the life insurance division of Liberty Hill Insur-

Question

Joe Barton, sales manager of the life insurance division of Liberty Hill Insur- ance Corporation, was hoping to provide additional guidelines for isolating prospective customers tor his sales force. One approach that he considered was to find the average amount of insurance that individuals with certain charac- teristics had. Then, any individu al that had the same characteristics and less than the average amount of insurance could be considered a prime prospect. Barton decided to implement this line of reasoning. He began by drawing a random sample of 20 policyholders from the firm's files. He started his analysis by focusing on income and family size. The relevant information taken from the files is presented below a. How would you analyze these data to isolate prospective consumers? b. Which family or families appear to represent good prospects? Income Amount of Life Insu rance In Thousands of Dollars)n Thousands of Dollars)Size Family 14 10 35 14 15 25 10 19 9 12 13 14 16 40 16 30 18 19 14 17

Explanation / Answer

(a) here we do regression analysis with the help of ms-excel of following data

(b)since the regression coefficient of x2 (family size) is negative so  smaller the family larger is the insurance.so smaller family size have good prospects.

SUMMARY OUTPUT Regression Statistics Multiple R 0.923120091 R Square 0.852150703 Adjusted R Square 0.834756668 Standard Error 3.648454479 Observations 20 ANOVA df SS MS F Significance F Regression 2 1304.259259 652.1296 48.99097342 8.77938E-08 Residual 17 226.2907414 13.31122 Total 19 1530.55 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Intercept 0.671072192 3.386647177 0.198152 0.845276065 -6.474128713 7.816273 X1 2.380284307 0.246172934 9.669155 2.52944E-08 1.860904821 2.899664 X2 -0.101179968 0.598882001 -0.16895 0.867831413 -1.364710532 1.162351

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