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?

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Quizplus · Accepted Answer

The hypothesis test is focused on determining if the life expectancy of ABI Insurance's clients has increased, which is a specific direction (longer life expectancy), making it a one-tailed test. Since life expectancy is a numerical value (average years lived), this test is about a mean, not a proportion.

Insurance Companies Track Life Expectancy Information to Assist in Determining