A Life Insurance Company Wants to Estimate Its Annual Payouts

question 133

Short Answer

A life insurance company wants to estimate its annual payouts. Assume that 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 4 years. What proportion of the participants die before they reach the age of 65?

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Definitions:

Price-Inelastic

Describes a situation where the demand for a good or service does not significantly change with a change in its price.

Dollar Expenditures

The amount of money spent on purchasing goods and services, often measured in U.S. dollars for international comparisons or analyses.

Illegal Drugs

Substances whose manufacture, possession, or use is prohibited by law due to their potential for abuse or harm.

Price-Inelastic

Referring to a market situation where demand or supply is not sensitive to price changes.