A 28 year old man pays $208 for a one-year life insurance policy with coverage of $110,000. If the probability that he will live through the year is 0.9993, what is the expected value of the insurance policy?

Question

anonymous · Answer

The probability he dies is 0.0007 and the return is $(110000 - 208) The probability he lives is 0.9993 and the return is -$208. So the expected value is: 0.0007*(110000-208)+0.9993*(-208)=-131 dollars. here is the same question but slightly different to give you the steps : http://www.algebra.com/algebra/homework/Probability-and-statistics.faq.question.245933.html

anonymous · Answer

i dont understand the work for it ):

anonymous · Answer

do you understand the life expectancy percentages for the year?

anonymous · Answer

yes

anonymous · Answer

i dont understand what expected value means