I am trying to research what a rational choice constitutes; a financially sound decision based on critically examining a set of data and concluding that the expected value for a given choice is higher than another choice.
Now assume that we are provided two different insurance policies, by different companies. And those companies might use different wordings, but essentially and non-ambiguously provide the same exact service; HOWEVER, they have DIFFERENT RATES!
I have 4 data points for each insurance.
YEARLY- The yearly contribution in let's say USD.
Total Premium -
The Guaranteed Paid OUT- I assume that I am guaranteed to be paid out this.
DEATH - Assumed paid out in case of death.
What metric would be good to figure out which choice is wiser to pick or rationally better ? What would be something like the expected value ?
Which one is a "rational choice" for the following to schemes and why ? How should one compare the "surrender value" of two different policies ?
$$\begin{array}{c|c|c|} & \text{Yearly(USD)} & \text{Total Premium} &\text{Guaranteed Paid out} &\text{Death}\\ \hline \text{Insurance A}& 5118 & 102360 & 68000 & 245800 \\ \hline \text{Insurance B}& 6824 & 136480 & 109803 & 318976 \\ \hline \end{array}$$
Kindly let me know what is a rational choice in case both insurances offer the same services.