What should the insurance company charge the woman for the policy if it would like to make an expected profit?
kdocimo90 asked:
An insurance company plans to sell a $150,000 one year life insurance policy to a 38-year old woman. On the basis of mortality rates for women of her age and back-ground, the insurance company determines that the probability of the woman dying in the next year is 0.00104. What should the insurance company charge the woman for the policy if it would like to make an expected profit of $45?
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Tagged With Back Ground, Insurance Company, Mortality Rates
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96 Responses to “What should the insurance company charge the woman for the policy if it would like to make an expected profit?”
45 = P - (150,000 * .00104)
unknown, despite the first answer, because it is unknown what the actual expenses of administering the account are, and you need to know expenses to calculate profit
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