## Related questions with answers

Use Table discussed earlier to find the annual premium of each of the following life insurance policies:

$\begin{array}{} \begin{array}{}\text{Sex} \end{array}& \begin{array}{}\text{Age} \end{array}& \begin{array}{}\text{Policy type}\end{array}& \begin{array}{}\text{Rate classification} \end{array}& \begin{array}{}\text{Face Value}\end{array}& \begin{array}{}\text{Annual premium}\end{array}&\\ \text{Male}&25&20-\text{year level term}&\text{T}&\$150,000 \end{array}$

Solutions

VerifiedLet $FV$ be a face value and $r$ be the rate. To find the annual premium for a 25-year-old male where we have a face value of $\$150,000$ using a tobacco rate for a 20-year level term and we let $P_A$ be the annual premium, we have

$\begin{aligned} P_A&=\frac{FV}{1,000}\cdot r\\ &=\frac{150,000}{1,000}\cdot2.86\\ &=150\cdot2.86\\ &=429 \end{aligned}$

Therefore, the annual premium for a $\$150,000$ 20-year level term policy is $\$429$.

To solve the *Estimated Annual Premium*, we have the formula:

$\begin{aligned} \text{Estimated Annual Premium}=\dfrac{\text{Face Value}}{\$1,000}\times \text{rate}&&\textcolor{#19804f}{[1]} \end{aligned}$

Since we are given the face value, we need to look for the corresponding rate.

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