Find the probability that a life aged 25 years survive 5 years. (I30=96500, I25=100000)?

insurance

Why?

It's a dull question, but I bet the answer is over 98%.

Sounds like an interesting actuarial science problem. Possibly in a statistics class. It will be very useful to you to solve this problem. Great learning experience.

Let's reverse engineer the actuaries.

The premium on a 5-year term life insurance policy for $1M (25 yr old male, really good health) is about $1500 total premium for the five years.

So, $1500/$1 Million = 0.15% of policies would have to result in death for the insurance companies to break even on claims.

Factor in the Insurance companies profit, selling costs, time value of money, profit on their investments, and commissions, and the real number is probably somewhere around 0.07% to 0.13%. If it were much higher, the insurance companies would have to charge more money. If it were much lower, the competition in the insurance market would lead to lower prices.

This math isn't perfect, but it should get you in the ballpark. You can use similar calculations for you specifically if you get a life insurance quote.

-->Adam

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