# Jim is a 60-year-old Anglo male in reasonably good health

Jim is a 60-year-old Anglo male in reasonably good health. He wants
to take out a \$50,000 term (i.e., straight death benefit) life insurance policy until he is 65. The policy will expire on his 65th birthday. The probability of death in a given year is provided.
x = age 60 61 62 63 64
P(death at this age)0.011530 .013180 .017530 .019270 .02305
﻿Jim is applying to Big Rock Insurance Company for his term insurance policy.
(a)
What is the probability that Jim will die in his 60th year? (Enter a number. Enter your answer to five decimal places.)
Using this probability and the \$50,000 death benefit, what is the expected cost to Big Rock Insurance (in dollars)? (Enter a number. Round your answer to two decimal places.)
\$
(b) What is the expected cost to Big Rock Insurance for years 61, 62, 63, and 64 (in dollars)? (For each answer, enter a number. Round your answers to two decimal places.)
year 61 \$
year 62 \$
year 63 \$
year 64 \$
What would be the total expected cost to Big Rock Insurance over the years 60 through 64 (in dollars)? (Enter a number. Round your answer to two decimal places.)
\$
(c)
If Big Rock Insurance wants to make a profit of \$700 above the expected total cost paid out for Jim’s death, how much should it charge for the policy (in dollars)? (Enter a number. Round your answer to two decimal places.)
\$
(d)
If Big Rock Insurance Company charges \$5000 for the policy, how much profit does the company expect to make (in dollars)? (Enter a number. Round your answer to two decimal places.)
\$

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