Using the premium schedules provided in Exhibit 8.2 , 8.3 , and 8.5 , how much i
ID: 2787215 • Letter: U
Question
Using the premium schedules provided in Exhibit 8.2, 8.3, and 8.5, how much in annual premium would a 25-year-old male have to pay for $100,000 of annual renewable term, level premium term, and whole life insurance? (Assume a 15-year term or period of coverage.) How much would a 25-year-old woman have to pay for the same coverage? Round your answers to the nearest dollar.
Consider a 40-year-old male (or female): Using annual premiums, compute the total cost of 15 years of coverage under annual renewable and level premium term options and whole life insurance coverage. Relate the advantages and disadvantages of each policy type to their price differences. Round your answers to the nearest dollar.
EXHIBIT 8.2 Representative Annual Renewable Term Life Insurance Premiums:$100,000 Policy, Preferred Nonsmoker Rates When you buy term life insurance, you're buying a product that provides life insurance
coverage and nothing more. This table shows representative rates for several age
categories and selected policy years; actual premiums increase every year. As you can see,
females pay less than males for coverage, and premiums increase sharply with age. AGE 25 AGE 40 Policy Year Male Female Male Female 1 $95 $49 $145 $117 5 $97 $63 $177 $151 10 $107 $88 $237 $194 15 $145 $117 $299 $236 20 $177 $151 $429 $366
Explanation / Answer
Annual Renewable Term Level Premium Term Whole Life Male $145 $116 $603 Female $117 $110 $525 40 year old Male Cost Advantages Annual Renewable term $4485 No need to requalify after every term Level Premium term $2025 lower premium than Annual Renewable term Whole Life $16170 Cash account with savings
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