Benny, Denny, Jenny, Kenny, and Lenny are tap-dancing siblings who perform as the Tapiocas
Do to their individual dance styles, Benny and Denny each have a 50% chance of developing hammer toe, and Jenny, Kenny and Lenny each have a 20% chance of developing hammer toe. Each visit to the podiatrist costs $250. If each member of the Tapiocas were offered hammer toe insurance, how much would the premium be?
Benny and Denny each have an expected medical claim of (0.5 × $250 ) = $125.
Jenny, Kenny, and Lenny each have an expected medical claim of (0.2 × $250 ) = $50.
The premium for each policy would be ($125 + $125 + $50 + $50 + $50 ) = $400 / 5 people = $80 each.
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