A Company That Sells Annuities Must Base the Annual Payout

question 81

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.Find the age at which payments have ceased for approximately 86% of the plan participants.

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Definitions:

Microsociologist

A sociologist specializing in the study of the social processes and interactions that occur in small group settings, focusing on the nuances of human behavior and social dynamics.

Conversation Patterns

Refers to the structured ways in which people exchange information, ideas, or thoughts through verbal or non-verbal communication.

Sociologist

A social scientist who studies the development, structure, and functioning of human society and the dynamics of social relationships.

Positivism

The theory that sense perceptions are the only valid source of knowledge.