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Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

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BuyFindarrow_forward

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-Up Extended Term
of Policy Force Type of Policy Value Insurance Years Days
14. 75,000 7 20-Payment Life

To determine

To calculate: The value of the non-forfeiture 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 $75,000, years in force 7 and type of policy is 20 payment life.

Explanation

Given Information:

The provided life insurance is,

The face value of policy is $75,000, years in force 7 and type of policy is 20 payment life.

Formula Used:

To calculate the value of non-forfeiture as follows:

,

Step1: in first, to ate the number of $1,000 of insurance desired by dividing the face. value of the policy by $1,000.

numberof$1000=facevalue of policy$1000

Step2: Option 1: Cash-value to locate the appropriate dollars per $1000 in the cash value of the table 19-3 and again multiply the number by $1000 of insurance.

Option 2: The second option is reduced the paid up insurance and locate the appropriate dollars per $1000 in the reduced paid up insurance column of the give table 19-3 and the multiply number by $1000 of insurance.

Option 3: The last option is extended term. To locate the length of the time of the new extended term in the years and days columns of the table 19-3.

Calculation:

The face value of policy is $75,000, years in force 7 and type of policy is 20 payment life.

The provided face value of policy is $75,000.

Step 1: Find the number of $1000 are,

numberof$1000=facevalue of policy$1000=750001000=75

Step2: Option 1: find the Cash-value to find that after being in force 7years a 20 payment life of the policy from the table 19-3 has a cash value of $ 101 per $1000 of the insurance and again multiply the number by $1000 of insurance

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