Reference no: EM132857704

Jim is a 60-year-old Anglo male in reasonably good health. He wants to take out a $50,000 term (i.e., straight death benefit) life insurance policy until he is 65. The policy will expire on his 65th birthday. The probability of death in a given year is provided.x = age6061626364P(death at this age)0.010630.013900.016840.020620.02371Jim is applying to Big Rock Insurance Company for his term insurance policy.

(a) What is the probability that Jim will die in his 60th year? (Enter a number. Enter your answer to five decimal places.)

Using this probability and the $50,000 death benefit, what is the expected cost to Big Rock Insurance (in dollars)? (Enter a number. Round your answer to two decimal places.)

(b) What is the expected cost to Big Rock Insurance for years 61, 62, 63, and 64 (in dollars)? (For each answer, enter a number. Round your answers to two decimal places.)

year 61 $
year 62 $
year 63 $
year 64 $

What would be the total expected cost to Big Rock Insurance over the years 60 through 64 (in dollars)? (Enter a number. Round your answer to two decimal places.)

(c) If Big Rock Insurance wants to make a profit of $700 above the expected total cost paid out for Jim's death, how much should it charge for the policy (in dollars)? (Enter a number. Round your answer to two decimal places.)

(d) If Big Rock Insurance Company charges $5000 for the policy, how much profit does the company expect to make (in dollars)? (Enter a number. Round your answer to two decimal places.)