Suppose a life insurance company sells a $240,000 1-year term life insurance policy to a 20-year-old female for $290. According to the National Vital Statistics Report, 58(21), the probability...

Suppose a life insurance company sells a

$240,000

1-year term life insurance policy to a

20-year-old

female for

$290.

According to the National Vital Statistics Report, 58(21), the probability that the female survives the year is

0.999544.

The expected value of this policy to the insurance company is

$180.56.

What is the standard deviation of the value of the life insurance policy? Why is the value so high?

Jun 09, 2022

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