he potential market represents all active duty military members, all veterans, a

Question

he potential market represents all active duty military members, all veterans, and their families. Assume that according to the United States Department of Defense, as of December 31, 2014 there were 1 comma 360 comma 425 1,360,425 active duty personnel in all armed services. The veteran population totaled 21 million at the end of 2014. Assuming the average cost of life insurance is $ 660 660 per year and that potential customers purchase one policy per year, use the chain ratio method to calculate the market potential for life insurance in the military market.

The number of buyers in the market can be estimated as ____. (Round to the nearest whole number.)

Explanation / Answer

Using chain ratio method:

Number of active duty personnel = 1360425

No of veteran citizens = 21000000

Let there be average of 4 people in a veteran’s family = 4

So total veteran + family population = 4*21000000 = 84000000

Average cost of life insurance = $660660 /year

1 customer buys 1 policy/year

Let all active duty personnel buy 1 policy per year each and a veteran family buys 4 policies per family

So number of buyers in the market = 1360425*1 + 21000000*4 = 1360425 + 84000000 =85360425 buyers

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