Answer :
The Insurance policy's anticipated value in this case is -20.
What is Insurance?
Insurance is a tool for risk management. You purchase protection against unforeseen financial losses when you purchase insurance. If something unpleasant happens to you, the insurance company pays you or someone else of your choosing.
Given,
Man pays -118 for one year
coverage = 140000
probability = 0.9993
The method used to calculate the insurance policy's expected value is:
= Chance that he won't live to see the end of the year * Coverage value - The cost of the insurance
= (1 - 0.9993)*140,000 - 118
= -20.
In this situation, the man's insurance coverage is expected to be worth -20.
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