Question

Stephanie has a homeowners insurance policy for her $355,000 home with an annual premium of $0.42 per $100 of value and a deductible of $500. under this policy, in the event of a major mishap, stephanie would have a total annual out-of-pocket expense of left-bracket (355,000 dollars divided by 100) times 42 cents right-bracket 500 dollars = 1,991 dollars. stephanie would like to lower her premium by increasing her deductible. if stephanie wants to increase her deductible to $1000, what annual premium would result in an annual out-of-pocket expense that is about the same as her current plan? a. $0.16 per $100 of value b. $0.28 per $100 of value c. $0.35 per $100 of value d. $0.46 per $100 of value

Answer 1

The annual premium result in an annual out-of-pocket expense that is about the same as her current plan is $0.28 per $100 of value.

What is an insurance premium?

Insurance premiums are paid for policies that cover all the basic needs such as healthcare, home, and life insurance.

We are given Amount of insurance policy for Stephanie = $ 355,000

Annual premium = $ 0.42 per $100

Deductible amount = $ 500

Total Annual out of pocket expense

= [($355,000/100) x $0.42] + $500

= $1,991  

Now, the New Deductible amount that Stephanie wants is $ 1000

So, Let the annual premium be x

To find the annual premium in an annual out-of-pocket expense that is about the same as her current plan when the deductible amount increases to $1000

355,000x / 100 + 1000 = 1991

3550x + 1000 = 1991

3550x = 1991 - 1000

3550x = 991

x = 991/3550

x = 0.279≈0.28

Hence the annual premium result in an annual out-of-pocket expense that is about the same as her current plan is $0.28 per $100 of value.

Learn more about Insurance premiums ;

brainly.com/question/13724529