Question

ASSUME 3 IN EVERY 2000 STUDENTS AT A LOCAL COMMUNITY COLLEGE HAVE TO QUIT DUE TO A SERIOUS HEALTH ISSUE. AN INSURANCE COMPANY OFFERS THEM A $12,000 POLICY FOR $50 A YEAR. WHAT IS THE AMOUNT THE INSURANCE COMPANY SHOULD EXPECT TO MAKE ON AVERAGE ON EVERY STUDENT THAT PAYS

Answer 1

From 2000 students paying $50 a year, they make $100,000. Lets say the 3 students who get in serious trouble with health use the whole policy of $12,000. thats $36,000. So the insurance company made $64,000 profit.