A Company That Sells Annuities Must Base the Annual Payout

question 151

Short Answer

A company that sells annuities must base the annual payout on the probability distribution of the length of life of the participants in the plan.Suppose the probability distribution of the lifetimes of the participants is approximately a normal distribution with a mean of 68 years and a standard deviation of 3.5 years.What proportion of the plan recipients would receive payments beyond age 75?

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Definitions:

Reversed

The act of a higher court changing the decision of a lower court.

Trial Court

A court of law where cases are tried in the first instance, as opposed to an appellate court.

Remanded

refers to the act of sending a case back to the original jurisdiction from which it was appealed for further proceedings.

Headnote

A brief summary or statement at the beginning of a legal case report, outlining the main facts and the court's decision.