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# E STATISTICS AND PROBABILITY (ECON) Insert Design Layout References Mailings Review View ' A ' V V A v V A I ' ITImes New Ron. II12 I A A 7 A' Q?

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E STATISTICS AND PROBABILITY (ECON) Insert Design Layout References Mailings Review View ©' A
' V V A v V A I '
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‘ When calculating premiums on life insurance products insurance companies oﬁen
use life tables which enable the probability of a person dying in any age interval to be calculated. The following table gives the number out of 100,000 females who are still alive
during each ﬁve-year period of life between the age of 20 to 60 (inclusive): Out of 100,000 females born Exact age m Number alive at exact age
20 99,150
25 98,983
30 90,781
35 98,545
40 98,182
45 97,628
50 96,831
55 95,585
60 93,713 Suppose a W female on her 30th birthday purchases a one million dollar,
ﬁve-year term life policy from an insurance company. That is, the insurance
company must pay her estate \$1 million if she dies within the next ﬁve years. (a) Determine the insurance company’s expected payout on this policy (b) What would be the minimum you would expect the insurance company to
charge her for this policy? Give a brief explanation of your answer (c) What would the expected payout be if the same policy were taken out by a
female on her 40th birthday? _‘/—+ 95% Page1of1 185Words D;&lt; English (US)

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