Tina Parker, a single mother, is 30 years old. She has called on you for an insurance consultation. Her objective is to

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Tina Parker A Single Mother Is 30 Years Old She Has Called On You For An Insurance Consultation Her Objective Is To 1 (111.24 KiB) Viewed 19 times

Tina Parker, a single mother, is 30 years old. She has called on you for an insurance consultation. Her objective is to purchase life insurance protection for the next 10 years while her children are growing up. Tina tells you that she can afford about $550 per year for insurance premiums. You have suggested either a 10-year term policy or a whole life policy. (a) Using Table 19-1, rounded to the nearest thousand, how much insurance coverage (in $) can Tina purchase under each policy? Hint: Divide her annual premium allowance by the rate per $1,000 for each policy. 10-year term policy $ $ whole life policy (b) If she should die in the next 10 years, how much more (in $) will her children receive under the term insurance? $ (c) Using Table 19-3, if she should live beyond the 10th year, determine her nonforfeiture options with the whole life policy. Option 1: Cash value (in $) $ Option 2: Reduced Paid-up Insurance (in $) $ Option 3: Extended Term (Enter your answer in years and an amount of days less than 365.) years, days
TABLE 19-1 Annual Life Insurance Premiums (per $1,000 of Face Value) Term Insurance 5-Year 10-Year Whole Life Term Term Age Male 18 $2.32 $4.33 19 2.38 4.42 20 2.43 4.49 21 2.49 4.57 22 2.55 4.64 23 2.62 4.70 24 2.69 4.79 25 2.77 4.85 26 2.84 4.92 27 2.90 5.11 28 2.98 5.18 29 3.07 5.23 30 3.14 5.30 35 3.43 6.42 40 4.23 7.14 45 6.12 8.81 50 9.72 14.19 55 16.25 22.03 60 24.10 37.70 Male Female $ 1.90 1.96 2.07 2.15 2.22 2.30 2.37 2.45 2.51 2.58 2.64 2.70 2.78 2.92 3.90 5.18 8.73 12.82 19.43 Female $ 4.01 4.12 4.20 4.29 4.36 4.42 4.47 4.51 4.60 4.69 4.77 4.84 4.93 5.35 6.24 7.40 9.11 13.17 24.82 Male Female $13.22 $11.17 13.60 11.68 14.12 12.09 14.53 12.53 14.97 12.96 15.39 13.41 15.90 13.92 16.38 14.38 16.91 14.77 17.27 15.23 17.76 15.66 18.12 16.18 18.54 16.71 24.19 22.52 27.21 25.40 33.02 29.16 37.94 33.57 45.83 37.02 53.98 42.24 Permanent Insurance 20-Payment Life Male $23.14 24.42 25.10 25.83 26.42 27.01 27.74 28.40 29.11 29.97 30.68 31.52 32.15 37.10 42.27 48.73 56.31 61.09 70.43 Female $19.21 20.92 21.50 22.11 22.89 23.47 24.26 25.04 25.96 26.83 27.54 28.09 28.73 33.12 36.29 39.08 44.16 49.40 52.55 20-Year Endowment Male $33.22 33.68 34.42 34.90 35.27 35.70 36.49 37.02 37.67 38.23 38.96 39.42 40.19 43.67 48.20 51.11 58.49 71.28 79.15 Female $29.12 30.04 31.28 31.79 32.40 32.93 33.61 34.87 35.30 35.96 36.44 37.21 37.80 39.19 42.25 46.04 49.20 53.16 58.08
TABLE 19-3 Nonforfeiture Options (per $1,000 of Face Value Issued to a Woman at Age 20) Whole Life Options 20-Payment Life Options 20-Year Endowment Options 1 2 3 2 3 1 2 3 Extended End Reduced Reduced Extended Term Extended Term Reduced Paid-Up Term of Cash Paid-Up Paid-Up Cash Years Days Value Year Value Insurance Insurance Insurance Years Days $ 11 $ 25 $ 90 4 217 $ 39 $ 97 7 132 32 64 212 14 86 91 233 204 54 99 367 23 152 186 381 310 98 186 496 30 206 324 512 117 157 314 789 34 142 647 794 350 262 491 1,000 1,000 1,000 3579526 10 15 20 Years NOBIæ 21 25 1 Cash Days Value 17 $ 29 23 73 142 101 54 191 218 322 77 505 -Life- 19 26 32 37 -Life-