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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

Gary Foster, age 26, wants to purchase a 10-year term insurance policy with a face value of $75,000. Calculate his annual and quarterly premiums. How much more will Gary pay per year if he chooses quarterly payments?

To determine

To calculate: The value of annual and quarterly premiums and the extra amount Gary pay per year if he chooses quarterly payments where the Gary Foster aged 26 and wants to purchase a 10years term insurance policy with a face value of $75,000.

Explanation

Given Information:

The provided life insurance is,

The Gary Foster aged 26 and wants to purchase a 10years term insurance policy with a face value of $75,000.

Formula Used:

To calculate the life insurance premium as follows:

Step1: To calculate the number of $1,000 insurance desired by dividing the face value of the policy by $1,000 and round to the nearest whole $1,000.

numberof$1000=facevalue of policy$1000

Step2: Locate the value of appropriate premium rate per $1,000 from the table 191 and choose the rate based on the policy desired, the age and sex of the provided applicant.

Step3: To calculate the annual premium by multiplying the number $1,000 of insurance desired from the table 191.

Annualpremium=numberof$1000×rate per $1000

Step4: Finally, multiply the appropriate 19-2 premium factor by the annual premium as,

Premiumother than annual=Annual premium×premium factor

Calculation:

Consider the provided life insurance, the face value of policy is $75,000.

Then calculate the number of $1,000 as,

numberof$1000=facevalue of policy$1000=75,0001000=75

Next find the premium per $1000 for the whole life of the insurance with the 26year old female to be $4

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