Consider a simplified example in which all 50,000 residents in a particular town pay $100 a month to the insurance company SecureSure for medical insurance coverage. The insurance company cannot predict whether a given resident will need hospitalization or how much any individuals care will cost. Suppose, however, it has data that on average, 10% of the citizens require care each month, costing an average of $1,000 each. The expected average cost of monthly care will be $per person. If the insurance company sets the monthlyequal to this amount, it would break even (on average).