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2 answers:
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Answer:
The insurance company should charge $1,873.5.
Step-by-step explanation:
Expected earnings:
1 - 0.99813 = 0.00187 probability of the company losing $1 million(if the client dies).
0.99813 probability of the company earning x(price of the insurance).
What premium would an insurance company charge to break even on a one-year $1 million term life insurance policy?
Break even means that the earnings are 0, so:
The insurance company should charge $1,873.5.