If each of 2,000 individuals face a 3% chance of requiring a surgery that costs $40,000 then an insurance company would expect to pay for ____________ surgeries (on average)per year that would cost __________,and would charge premiums of__________.

Question

Quizplus · Accepted Answer

Each individual has a 3% chance, so 0.03 * 2000 = 60 surgeries. The cost is 60 * $40,000 = $2,400,000. Premiums are $2,400,000 / 2000 = $1,200.

If Each of 2,000 Individuals Face a 3% Chance of Requiring