M purchases a $70,000 Life Insurance Policy with premium payments of $550 a year for the first 5 years. At the beginning of the

Question

3 years ago

6

M purchases a $70,000 Life Insurance Policy with premium payments of $550 a year for the first 5 years. At the beginning of the

sixth year, the premium will increase to $800 per year but will remain level thereafter. The face amount will remain at $70,000 throughout the life of the policy. The type of policy that M has purchased is?

Business

1 answer:

MaRussiya [10] · Answer 1 · 2021-12-10T11:26:24+03:00

<span>This is a modified premium life insurance policy. In this case, the premium (the price paid for the insurance during each time period) is fixed for a specific frame (at rates that are usually lower than average), but then (usually) increases after a certain number of months or years to a rate greater than the average.</span>