Insurance companies track life expectancy information to assist in determining the cost of life insurance policies.Last year the average life expectancy of all policyholders was
77 years.ABI Insurance wants to determine if their clients now have a longer life
Expectancy, on average, so they randomly sample some of their recently paid policies.
The insurance company will only change their premium structure if there is evidence that
People who buy their policies are living longer than before.Which of the following
Statement is true about this hypothesis test?

Question

Quizplus · Accepted Answer

The hypothesis test is about whether the clients have a longer life expectancy, which involves comparing the mean life expectancy of the recently paid policies to the overall average life expectancy of 77 years. This is a one-tailed test because the insurance company is only interested in detecting an increase in life expectancy, not a decrease. Option A is incorrect because it's about proportion, not mean. Option C is incorrect because it's also about proportion but not two-tailed. Option D is incorrect because it's two-tailed when the test only asks to detect an increase. Option E is incorrect because there is a correct answer.

Insurance Companies Track Life Expectancy Information to Assist in Determining