Life insurance premiums and comparison of types Representative Annual Renewable

Question

Life insurance premiums and comparison of types Representative Annual Renewable Term Life Insurance Premiums $100,000 Policy, Preferred Nonsmoker Rates EXHIBIT 8.2 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 Male Female $95 $49 $97 $63 $107 $88 $145 $117 $177 $151 AGE 40 Male Female $145 117 $177 151 $237 $194 $299 $236 $429 $366 Policy Year 10 15 20 Representative Level Premium Term Life Rates: $100,000 Preferred Nonsmoker Policy EX HIBIT 8.3 This table shows representative annual premiums for $100,000 of level premium term life insurance. Although level premium costs less than annual renewable term for the same period, you must requalify at the end of each term to retain the low premium Age 25 35 10 YEAR Male/Female $106/$102 $108/$102 15 YEAR Male/Female $116/$110 $117/$112

Explanation / Answer

Solution:

Determining How much an Annual Permium would have to Pay a 25 year Old Male and how much would a 25 Year Old Woman have to Pay for the Same Coverage:

Calculation of the Total Cost of 10 Years of Coverage under Annual Renewable and Level Permium Term Options and Insurance Coverage:

Insured Annual renewable term Level premium term Whole life insurance 25 Yr -Male $107 * 10 = $1,070 $106* 10 = $1,060 $603 * 10 = $6,030 25 Yr - Female $88 * 10 = $880 $102* 10 = $1,020 $525 * 10 = $5,250

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