Question

1. The sample life insurance premium table illustrates the monthly premium for every $25,000 of coverage.

Answer 1

Answer:

1. A.  $23
2. B.  0.997359

Step-by-step explanation:

1. The policy rates in the table are for $25000 of insurance. Lydia wants $100,000 of insurance, which is 4 times the amount quoted in the table. Hence her premium will be 4 times the quoted premium. Her spot in the table is in the age 24–30 row and the Female Non-Smoker column. Lydia's premium will be 4×$3.50, or $14 per month.

She wants 2 times the amount quoted in the table ($50,000) of insurance for her spouse, so the premium will be 2 times that quoted in the table. His spot in the table is in the age Under 24 row and the Male Smoker column. The premium for his insurance will be 2×$4.50, or $9 per month.

The total of the two premiums will be $14 = 9 = $23 per month.

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2. The probability of living another year is the complement of the probability of dying. For a 35–44 year-old male, the probability of dying is 264.1/100,000, about 2.641×10^-3. The complement of that is ...

  1 - 0.002641 = 0.997359