Posted by Jillian on Monday, September 24, 2012 at 1:46pm.
An insurance company charges its policy holders an annual premium of $200 for the following type of injury insurance policy. If the policy holder suffers a "major injury" resulting in lengthy hospitalization, the company will pay out $15,000 to the injured policy holder. If the policy holder suffers a "minor injury" resulting in significant absence from work, the company will pay out $4,000 to the injured policy holder. If no injury is encountered (the most probable event) the company, of course, does not payout anything to the policy holder.
Past records show that each year, 1 in every 2000 policy holders experience a "major injury" and 1 in every 500 experience a "minor injury.." Assuming that the only company expense related to this policy is the annual payout.
1. Construct a probability distribution table for "X" where "X" refers to the annual profit for this policy, where "X" = Annual Premium - Annual Payout.
2. Compute the expected annual profit that the company can expect to receive per policy holder.
No one has answered this question yet.
Answer this Question
Related Questions
statistics - An insurance company charges its policy holders an annual premium ...
math - A fire insurance policy has an annual premium of $ 780. what is the ...
alisha - a fire insurance policy has an annual premium of $780. what is the ...
accounting - A company has an insurance policy for fifty thousand dollars that ...
ACCOUNTING - I have to prepare an adjusting entry for Dec 31, 2008 for prepaid ...
accounting - I have to prepare an adjusting entry for Dec 31, 2008 for prepaid ...
ACCOUNTING plz help thnx - I have to prepare an adjusting entry for Dec 31, 2008...
math - James has opted for a 20-payment life insurance policy of $200,000. James...
math - James has opted for a 20-payment life insurance policy of $200,000. James...
math - Which of the following are true of ordinary whole-life insurance policies...
For Further Reading
