Question

Assume 6 in every 2000 students at the local community college have to quit due to serious health issues. An insurance company offers them a ​$10,000 policy for ​$60 a year. What is the amount the insurance company should expect to make on average on every student that​ pays?

Answer 1

Given:

6 out of 2000 students quit community college due to serious health issues.
$10,000 insurance company offer
$60 per year

Based on the data, there are 6 students who will be given the $10,000 insurance per year. So they need

6 * 10,000 = $60,000 to make a break-even on their insurance offer

If a student pays $60 per year, they should have

$60,000 / $60 = 1,000 students who will pay per year to reach the break-even mark of their investment. If the number of students will exceed 1,000, the company will begin to earn.