Explain why the company suffers a loss of $98,750 on such a policy if a client dies at age 25

If a client prematurely dies at age 25, then the company will suffer a loss of $98,750, which is the estimated amount of company income that the aforementioned client would have paid in order to keep the policy active and in good standing.

Because due to the low probability of death of a person of 25 years, the annual quota of the life insurance is calculated in $ 250, the insurance is for $100,000 and assuming that the insurance was sold when the client was 21 years old, made 5 payments of $250, then, $100,000 less $1250 of the 5 payments: $ 98,750, which is the amount that the insurance company loses.