statistics
A medical insurance policy covers a particular illness assuring a sum of $1,500,000. If the probability of the illness occurring is 0.0001 and the expected profit is $270 what is the premium that the company should charge?
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The premium that the company should charge is $27,000. This is determined by taking the expected profit ($270) and dividing it by the probability of the illness occurring (0.0001) to get the amount that the company needs to charge in order to break even. So, $270/$0.0001 = $27,000.
