SOA Exam P Sample Question 145
Study guide: Exam P-1
A company has five employees on its health insurance plan. Each year, each employee independently has an 80% probability of no hospital admissions. If an employee requires one or more hospital admissions, the number of admissions is modeled by a geometric distribution with a mean of 1.50.
The numbers of hospital admissions of different employees are mutually independent. Each hospital admission costs 20,000.
Calculate the probability that the company's total hospital costs in a year are less than 50,000.
- A) 0.41
- B) 0.46
- C) 0.58
- D) 0.69
- E) 0.78
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