How sample indicate that insurance company should change

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Reference no: EM13128379

Insurance companies track life expectancy information to assist in determining the cost of life insurance policies. The insurance company knows that, last year, the life expectancy of its policyholders was 77 years. They want to know if their clients this year have a longer life expectancy, on average, so the company randomly samples some of the recently paid policies to see if the mean life expectancy of policyholders has increased. The insurance company will only change their premium structure if there is evidence that people who buy their policies are living longer than before.

Does this sample indicate that the insurance company should change its premiums because life expectancy has increased? Test an appropriate hypothesis and state your conclusion.

Reference no: EM13128379

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