Tina Parker, a single mother, is 20 years old. She has called on you for an insurance consultation. Her objective is to purchase life insurance protection for the next 10 years while her children are growing up. Tina tells you that she can afford about $550 per year for insurance premiums. You have suggested either a 10-year term policy or a whole life policy. (a) Using Table 19-1, rounded to the nearest thousand, how much insurance coverage (in $) can Tina purchase under each policy? Hint: Divide her annual premium allowance by the rate per $1,000 for each policy. 10-year term policy whole life policy (b) If she should die in the next 10 years, how much more (in $) will her children receive under the term insurance? 2$ (c) Using Table 19-3, if she should live beyond the 10th year, determine her nonforfeiture options with the whole life policy. Option 1: Cash value (in $) Option 2: Reduced Paid-up Insurance (in $) Option 3: Extended Term (Enter your answer in years and an amount of days less than 365.) years, days
Tina Parker, a single mother, is 20 years old. She has called on you for an insurance consultation. Her objective is to purchase life insurance protection for the next 10 years while her children are growing up. Tina tells you that she can afford about $550 per year for insurance premiums. You have suggested either a 10-year term policy or a whole life policy. (a) Using Table 19-1, rounded to the nearest thousand, how much insurance coverage (in $) can Tina purchase under each policy? Hint: Divide her annual premium allowance by the rate per $1,000 for each policy. 10-year term policy whole life policy (b) If she should die in the next 10 years, how much more (in $) will her children receive under the term insurance? 2$ (c) Using Table 19-3, if she should live beyond the 10th year, determine her nonforfeiture options with the whole life policy. Option 1: Cash value (in $) Option 2: Reduced Paid-up Insurance (in $) Option 3: Extended Term (Enter your answer in years and an amount of days less than 365.) years, days
Chapter5: Gross Income: Exclusions
Section: Chapter Questions
Problem 52P
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Transcribed Image Text:TABLE 19-3 Nonforfeiture Options (per $1,000 of Face Value Issued to a Woman at Age 20)
Whole Life Options
20-Payment Life Options
20-Year Endowment Options
2
3
2
3
Extended
Extended
Extended
End
Reduced
Reduced
Reduced
Term
Term
Term
of
Cash
Paid-Up
Cash
Days Value
Paid-Up
Cash
Years Days Value
Paid-Up
Year
Value
Insurance
Years
Insurance
Insurance
Years
Days
3
$ 1
$ 25
2
17
$ 29
$ 90
$ 39
$ 97
7
132
4
217
32
64
9.
23
73
212
14
86
91
233
19
204
7
54
99
13
142
101
367
23
152
186
381
26
310
10
98
186
17
54
191
496
30
206
324
512
32
117
15
157
314
21
218
322
789
34
142
647
794
37
350
20
262
491
25
77
505
1,000
-Life-
1,000
1,000
-Life-
TABLE 19-1 Annual Life Insurance Premiums (per $1,000 of Face Value)
Term Insurance
Permanent Insurance
5-Year
10-Year
Whole
20-Рауment
Life
20-Year
Term
Term
Life
Endowment
Age
Male
Female
Male
Female
Male
Female
Male
Female
Male
Female
$33.22
$ 4.33
4.42
$ 2.32
$ 1.90
$ 4.01
4.12
18
$13.22
$11.17
$23.14
$19.21
$29.12
2.38
13.60
11.68
24.42
20.92
33.68
34.42
19
1.96
30.04
20
2.43
2.07
4.49
4.20
14.12
12.09
25.10
21.50
31.28
21
2.49
2.15
4.57
4.29
14.53
12.53
25.83
22.11
34.90
31.79
22
2.55
2.22
4.64
4.36
14.97
12.96
26.42
22.89
35.27
35.70
32.40
23
2.62
2.30
4.70
4.42
15.39
13.41
27.01
23.47
32.93
24
2.69
2.37
4.79
4.47
15.90
13.92
27.74
24.26
36.49
33.61
25
2.77
2.45
4.85
4.51
16.38
14.38
28.40
25.04
37.02
34.87
26
2.84
2.51
4.92
4.60
16.91
14.77
29.11
25.96
37.67
35.30
27
2.90
2.58
5.11
4.69
17.27
15.23
29.97
26.83
38.23
35.96
28
2.98
2.64
5.18
4.77
17.76
15.66
30.68
27.54
38.96
36.44
29
3.07
2.70
5.23
4.84
18.12
16.18
31.52
28.09
39.42
37.21
30
3.14
2.78
5.30
4.93
18.54
16.71
32.15
28.73
40.19
37.80
35
3.43
2.92
6.42
5.35
24.19
22.52
37.10
33.12
43.67
39.19
40
4.23
6.12
3.90
7.14
6.24
27.21
25.40
42.27
36.29
48.20
42.25
45
50
5.18
8.81
7.40
33.02
29.16
48.73
39.08
51.11
46.04
9.72
8.73
14.19
9.11
37.94
33.57
56.31
44.16
58.49
49.20
55
16.25
12.82
22.03
13.17
45.83
37.02
61.09
49.40
71.28
53.16
60
24.10
19.43
37.70
24.82
53.98
42.24
70.43
52.55
79.15
58.08
Transcribed Image Text:Tina Parker, a single mother, is 20 years old. She has called on you for an insurance consultation. Her objective is to purchase life insurance protection for the next 10 years while her children are growing up. Tina
tells you that she can afford about $550 per year for insurance premiums. You have suggested either a 10-year term policy or a whole life policy.
(a) Using Table 19-1, rounded to the nearest thousand, how much insurance coverage (in $) can Tina purchase under each policy? Hint: Divide her annual premium allowance by the rate per $1,000 for each
policy.
10-year term policy
$
whole life policy
(b) If she should die in the next 10 years, how much more (in $) will her children receive under the term insurance?
$
(c) Using Table 19-3 if she should live beyond the 10th year, determine her nonforfeiture options with the whole life policy.
Option 1: Cash value (in $)
$
Option 2: Reduced Paid-up Insurance (in $)
$
Option 3: Extended Term (Enter your answer in years and an amount of days less than 365.)
years,
days
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