question archive Life insurance companies are concerned with expected values, namely the expected value that a policy holder will live next year
Life insurance companies are concerned with expected values, namely the expected value that a policy holder will live next year
Subject:AccountingPrice: Bought3
Life insurance companies are concerned with expected values, namely the expected value that a policy holder will live next year. Using the hypothetical value of costs below, and the actual data from the social security office in the PDF file on Moodle, determine how much the insurance company will be making on each of their 5-year term policies. A 5-year term policy is good for 5-years and then expires - the policyholder only gets paid if death is in those 5 years. Age at purchase 5-year term annual cost per $1000 of coverage 25 1.93 30 2.05 35 2.27 40 3.50 45 4.65 You can assume that the policy holder pays for all five years when he/she buys the policy. The insurance company earns 4% on the money paid in, which is compounded annually. You should assume the buyer of the policy is male (this is not to be sexist. Doing the problem for both genders would double the length of the problem).
