EBK PFIN
6th Edition
ISBN: 8220103648844
Author: Billingsley
Publisher: CENGAGE L
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Chapter 8, Problem 6FPE
Summary Introduction
To determine: Premiums payable for life insurance policies of 25 years old and 40 years old, male and female insurers.
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A 25-year-old and a 50-year-old apply for 10-year term life insurance plans. Which person will have a higher premium and why?
ii.
If a life insurance company insures 50 females age 25 for $40,000, 10-
year term policies, how much would they expect to pay out? Solve
If a life insurance company insures 50 females age 25 for $40,000, 10-
year term policies, how much would they expect to pay out?Solve
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- Insurance underwriting relies heavily on statistics to determine the amount of insurance premium to charge. The probability that a 25-year-old female will live another year is 0.99786 based on data from the national registry agency. Calculate the insurance premium an insurance company would charge to break even on a 1 year $0.5million term-life insurance policy?arrow_forwardchoose three major insurance companies, obtain the premiums of life insurance policies for a 30 year old man with $300, 000 insurance coverage (death benefit). Compare the premium for term, whole or universal life insurance. Prepare a premium table and indicate which policy you consider and why?arrow_forwardYou are the wage earner in a "typical family," with $28,000 gross annual income. Use the easy method to determine how much life insurance you should carry. (Do not round intermediate calculations.) Life insurance needarrow_forward
- Tommy Cook is 19 years old and is interested in purchasing a whole life insurance policy with a face value of $80,000. a. Calculate the annual insurance premium for this policy. Note: Refer to the tables in the text for input data. Face value= Number of $1,000 = Rate per $1,000 = (whole life insurance, male -19) Annual premium = b. Calculate the monthly insurance premiums. Monthly percent Monthly premium = c. How much more will Tommy pay per year if he chooses monthly payments? Total of monthly payments = If paid monthly = More will be paidarrow_forwardCalculate the annual premium for a 20 year old male seeking 5 year term insurance valued at $120,000.arrow_forwardA policyholder wishes to annuitize the cash value of her insurance policy at retirement. She desires an annual payment of $97.8,000 per year and the cash value is expected to be $1.5 million at retirement. Approximately how many payments can she expect to receive if annuity interest rates are 5.739 percent? (Do not round intermediate calculations. Round your answer to a whole number.)arrow_forward
- If you earned $130,000 this year, you would pay more OASDI and Medicare than your partner who earned $75,000. Do you agree or disagree? Please provide calculations to support your answerarrow_forward0. Assume that upon graduation you make$63,500per year. What are the legally required costs for Social Security, Old-age, Survivors, and Disability Insurance, \& Medicare for the firm you work for in both dollar values and percentages? How much will you have to pay yourself? How much would you pay if you were self-employed earning the same amount?arrow_forwardTABLE 20.1 Life insurance rates for males (for females, subtract 3 years from the age. Non-binary individuals currently need to apply as male or female.)² Five-year term Straight life Twenty- payment life 8.28 Twenty-year endowment 1.85 13.85 1.85 8.61 14.35 1.85 8.91 14.92 1.85 9.23 15.54 1.85 9.56 16.05 1.85 9.91 17.55 1.85 10.29 17.66 1.86 10.70 18.33 11.12 19.12 11.58 20.00 12.05 20.90 12.57 21.88 13.10 22.89 13.67 23.98 14.28 25.13 14.92 26.35 15.60 27.64 16.30 28.97 17.04 30.38 17.81 31.84 18.61 33.36 19.44 34.94 36.59 20.31 21.21 38.29 22.15 40.09 Age 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 2The life insurance tables in this chapter show premiums for a sampling of age groups, options, and coverage available to those under 45 years of age. Age 20 21 287285888 23 24 26 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 1.86 1.87 1.87 1.87 1.88 1.95 2.08 2.23 2.44 2.67 2.95 3.24 3.52 3.79 4.04 4.26 4.50 Age 20 21 22 23 24 25 26 27 28 29 30 31 32 33…arrow_forward
- Suppose a life insurance company sells a $230,000 one-year term life insurance policy to a 24-year-old female for $240. The probability that the female survives the year is 0.999514. Compute and interpret the expected value of this policy to the insurance company. The expected value is $ (Round to two decimal places as needed.)arrow_forwardDarlene wants to buy a $200,000 term life insurance policy. She is 34 years old. Using the premium table, what is her annual premium for a 10-year policy? a $100 b. $108 C$1.202 d. $1.290arrow_forwardWhen you retire, a key goal is to be able replace about 80% of your pre-retirement income level. Social Security will cover a higher percentage of low earners’ needed replacement income than high earners’ replacement income. True or Falsearrow_forward
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