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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
5. 100,000 Female—29 5-Year Term

To determine

To calculate: The annual premium, semiannual premium, quarterly premium and monthly premium if a 29 year old female has the face value of $100,000 for an 5 year insurance policy.

Explanation

Given Information:

A 29 year old female has the face value of $100,000 for a 5 year insurance policy.

Formula used:

The formulas used for calculation are listed below:

Annual premium=Number of $1,000×rate per $1,000Monthly premium=Annual premium×monthly premium factorSemi-annually premium=Annual premium×Semi-annually premium factorQuarterly premium=Annual premium×Quarterly premium factor

Calculation:

Life insurance is defined as the insurance which pledges a specific sum of money to the surviving beneficiaries upon the death of the person who is assured. The followings steps are used to calculate

Step 1: It is needed to calculate the number of $1,000 of insurance desired by the formula given below:

Number of $1,000 =Face value of policy$1,000=$100,000$1,000=100

Step 2: The annual premium is calculated by the formula given below:

Annual premium=Number of $1,000×rate per $1,000

The rate per $1,000 is calculated from the annual life insurance premiums table. A 29 year old female has the face value of $100,000 for a 5 year insurance policy has a 2

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