A fair insurance policy is one whose premium is _____ the expected value of the claims.

A) equal to
B) greater than
C) less than
D) unrelated to

Expected Value

In reference to a random variable, the weighted average of all possible values, where the weights on each possible value correspond to the probability of that value occurring.

Premium

An amount paid for an insurance policy or an amount over the regular price for enhanced or additional features or services.

Insurance Policy

A contract between an individual or entity and an insurance company, outlining coverage terms and conditions for specific risks.