How is probability used in insurance calculations?
Link to this answer
Share this credible answer with others. Simply paste this code into your blog or Web page:
Probability computed in this way is the basis of insurance calculations. If, out of a certain group of 1,000 persons who were 25 years old in 1900, 150 of them lived to be 65, then the ratio 150/1,000 is assigned as the probability that a 25-year-old person will live to be 65 (the probability of such a person's not living to be 65 is 850/1,000, since the sum of these two measures must be 1). Such a probability statement is of course true only for a group of people very similar to the original group. However, by basing such life-expectation figures on very large groups of people and by constantly revising the figures as new data are obtained, values can be found that will be valid for most large groups of people and under most conditions of life.
|
Answer verified with
|
Related research articles
HighBeam gives you access to newspaper, magazine, and trade journal articles plus press releases, facts, information, and biographies from thousands of sources.