[Solution Library] An insurance company charges a 21 year old male a premium of $500 for a one year $100,000 life insurance policy. A 21 year old male has a 0.999
Question: An insurance company charges a 21 year old male a premium of $500 for a one year $100,000 life insurance policy. A 21 year old male has a 0.999 probability of living for a year.
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From the perspective of a 21 year old male (or his estate) what are the values of two different outcomes?
The value if he lives is ___ dollars
The value if he dies is ___ dollars. -
What is the expected value for a 21 year old male who buys the insurance?
The expected value is __ dollars. - What would be the cost of the insurance if the company just breaks even (in long run with many such policies), instead of making a profit?
Deliverable: Word Document 
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