Chapter 19, Problem 1ES

To determine

To calculate: The annual premium for a female aged 55 with universal life policy and the face value $300,000.

Answer to Problem 1ES

Solution:

The annual premiumfor a female aged 55 is $5679.

Explanation of Solution

Given Information:

The females with age 55years having universal life policy and with face value $300,000 having PREF rate classification.

TABLE 19-1 Estimated Annual Life Insurance Premium Rates per $1000 of Face Value is referred.

Formula used:

The annual premium is calculated as:

$\text{Estimated annual premium = rate}\times \frac{\text{face value}}{\$1000}$.

Calculation:

The age of the female is 55years with universal life policy and PREF rate classification.

The face value is $300,000.

Use the formula given to find the annual premium.

From the TABLE19-1for the universal life policy and PREF, the rate at age 55 is 18.93%.

Therefore, the annual premium will be:

$\begin{array}{c}\text{rate}\times \frac{\text{face value}}{1000}=18.93\times \frac{300000}{1000}\\ =18.93\times 300\\ =5679\end{array}$

Hence, the annual premium is $5679.