An insurance company gathered data on the payouts it had to make over the previous year. It needs to pay out $20,000 if a policyholder dies, $10,000 if a policyholder gets disabled, and $0 if the policyholder survives the year unharmed. Let X be the amount of money the company will have to payout to a policyholder this year. The table below is the distribution for X. x n 0 10000 20000
p n 0.98 0.015 0.005
50 people are now policyholders. The company should save
dollars to offset the anticipated payout costs for these 50 people.