Answer:
50,400
Explanation:
Using application of total expectation, E;
N= Number of policy holders who have zero accidents in one month
P= Probability
N|Low = 400
N|High=600
P|Low=0.9
P|High=0.8
Therefore E = (N|Low*P|Low)+(N|High*P|High)
E=(400*0.9)+(600*0.8)
E=360+480
E=840
Then Total bonus for the year B
B= E*12*5
B=840*12*5
B=50,400
The expected bonus payment from the company to the 1000 policyholders in one year is 50,400
Insurance policy is a legal contract that binds both policyholder and the insurance company towards each other. The policy contains the details of the conditions or circumstances under which either the insured individual or policy nominee receives insurance benefits from the insurer.
Using application of total expectation, E;
N = Number of policy holders who have zero accidents in one month
P = Probability
N|Low
= 400
N|High
= 600
P|Low
= 0.9
P|High
= 0.8
Therefore E
= (N|Low*P|Low) + (N|High*P|High)
= (400 * 0.9) + (600 * 0.8)
= 360 + 480
= 840
Then Total bonus for the year B
= E * 12 * 5
= 840 * 12 * 5
= 50,400
Hence, the expected bonus payment from the company to the 1000 policyholders in one year is 50,400
Learn more about insurance policy here : https://brainly.com/question/26285319
