. There is an 80% probability that Tom will be in good health during the year and incur only $200 in medical expenses, but there is a 20% probability that he will be ill and incur $20,000 in medical expenses. If an insurance company charged Tom an actuarially fair premium, how much would Tom pay for health insurance

The  Actuarially Fair Premium that Tom have to pay for hid Health Insurance is $4,160

Explanation:

To compute the amount that Tom have to pay for Health Insurance is;

Actuarially Fair Premium = (Probability of actuality ill × Payments incurred) + (Probability of not actuality ill × Payments incurred)

Actuarially Fair Premium = (20% x $20,000) + (80% x $200)

Actuarially Fair Premium = $4,000 + $160

Actuarially Fair Premium  = $4,160

i believe it’s b because the rest don’t make sense