   Chapter 19.I, Problem 13RE ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# Calculate the value of the nonforfeiture options for the following life insurance policies. Face Value Years in Cash Reduced Paid-U p Extended Term of polics Force Type of Polio Value Insurance Years Days 13. 25.000 5 20-Year Endowment

To determine

To calculate: The value of the nonforfeiture options that is cash value, reduced paid-up insurance and extended term in years and days for the provided life insurance, face value of policy is $25000, years in force 5 and type of policy is 20years endowment. Explanation Given Information: The provided life insurance is, The face value of policy is$250,00, years in force 5 and type of policy is 20years endowment.

Formula Used:

The steps to calculate the various non-forfeiture options are as follows:

Step1: First calculate the number of $1000 of insurance by division of the face value of the policy by$1000 and rounding to the nearest whole $1000. Numberof$1000=Facevalue of the policy$1000 Step2: Now there are three options: Option I-Cash value: For this, fix the appropriate dollars per$1000 in the Cash value column of the table 19-3 and multiply it by the number of $1000 of insurance. Option II-Reduced Paid-Up Insurance: Determine the appropriate dollars per$1000 in the Reduced Paid -Up Insurance column of the table 19-3 and multiply it by the number of $1000 of insurance. Option III-Extended Term: For this fix the length of time of new extended term policy in Years and Days column of table 19-3. Calculation: The face value of policy is$25000, years in force 5 and type of policy is 20years endowment.

The provided face value of policy is $25000. Step 1: Find the number of$1000 are,

number of $1000=facevalue of policy$1000=250001000=25

Step2: Option 1: find the Cash-value to find that after being in force 5years a 20years endowment of the policy from the table 19-3 has a cash value of $91 per$1000 of the insurance and again multiply the number by \$1000 of insurance

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