A $1 million, ten-year term life insurance policy for a fifty-year old male in Massachusetts costs around $1,200 per year. The same policy for a female costs around $980 per year.
Explain why life insurance for a female costs less than for a male.
Suppose the government were to pass a law requiring insurers to offer the same prices for men and women. What effect would you expect this to have on prices and insurance coverage? How would this affect social welfare?