The premiums on $100,000 of 20 year term life insurance are $25 per month for a

Question

The premiums on $100,000 of 20 year term life insurance are $25 per month for a forty year old non-smoker. The risk free interest rate is 3% per year. In what year does the present value of the death benefit become less than the present value of all of the premiums paid to that point in time? (Assume the first premium is paid at time 0 and the death benefit is paid at the end the year.

After 13 years

After 10 years

After 15 years

After 20 years.

After 13 years

After 10 years

After 15 years

After 20 years.

Explanation / Answer

Present value of all the premiums paid is graeter than the present value of benefit after 15 years

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