Question: According to the current Commissioner's Standard Ordinary mortality table, adopted by state insurance regulators in December 2002, a 25-year old man has probabilities of dying during the next five years that are listed in the table below. The probability of "survive" is missing — question a) will ask you to compute it.

1. What is the probability that a 25-year-old man does not die in the next five years?
2. An online insurance offers a term insurance policy that will pay $100,000 if a 25-year-old man
   dies within the next 5 years. The cost is $175 per year. So the insurance company will take in
   $875 from this policy if the man does not die within five years. The insurance’s loss depends on
   how many premiums were paid and is summarized in the table above. What is the insurance
   company’s mean cash intake from such policies? (HINT: compute the mean of the random
   variable)
3. Explain why selling insurance is not risky for an insurance company that insures many thousands

of 25-year-old men.

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