Answer Happy

An individual is seeking life-insurance to pay to his family members in the event of his death. The actuarial estimation of the costs of providing the insurance are $5,000 a year (average payouts to be made). What do you expect the person will be willing to pay for the insurance and why? O A. We expect he would be willing to pay the actuarial cost of the insurance because he is risk neutral and would not tolerate a premium OB. We expect that he would be willing to pay above the actuarial cost of the insurance because he is risk-avolding C. We expect he would be willing to pay above the actuarial cost because the insurance company is risk-seeking and can maximize their profits this way, OD. We expect he would be willing to pay slightly below the actuarial value of $5,000 per year because insurance is a buyer's market.