There is a 0.9986 probability that a randomly selected 30 year old male lives through the year. The policy pays $100000 and the premium charged is $161.

The amount that the person recieves if he dies is $100000 but the probability of this happening is 0.0014. The probability that he does not receive anything is 0.9986. A payment of $161 has to be made in both the cases.

**The net expected value of the amount received from the insurance company is 0.0014*100000 - 161 = -$21**

## We’ll help your grades soar

Start your 48-hour free trial and unlock all the summaries, Q&A, and analyses you need to get better grades now.

- 30,000+ book summaries
- 20% study tools discount
- Ad-free content
- PDF downloads
- 300,000+ answers
- 5-star customer support

Already a member? Log in here.

Are you a teacher? Sign up now