The Lieberman Insurance Company sells a 5-year term insurance policy with face value of $250,000 to a

Question:

The Lieberman Insurance Company sells a 5-year term insurance policy with of $250,000 to a 39-year-old man for an annual premium of $973. The mortality table is given below.

a. Assume the policyholder pays the premium annually. What is the insurance company profit on this policy for each year of death?
b. What is the expected profit from selling one of these policies? Round to the nearest cent.
c. What is the expected profit from selling 5,000 of these policies?

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...