Question

If the policy premium on a 30 year $500,000 term life policy for a 35 year old female is decreased to $361, what is the percent decrease in price? (round to the nearest whole percent) A) 6% B) 7% C) 8% D) 9%

Answer 1

Answer:

The percentage decrease in price is 21.43

Step-by-step explanation:

Given as :

the policy amount fro 35 years = $500,000

The time period of policy is 35 years

The Amount decreased = $361

Let The percentage decrease = R %

Now, From compounded method

Amount after n years = initial amount × $(1-\frac{Rate}{100})^{n}$

or, $361 =  $500,000 × $(1-\frac{Rate}{100})^{30}$

Or, $\frac{361}{500000}$ = $(1-\frac{Rate}{100})^{30}$

or, 0.000722 = $(1-\frac{Rate}{100})^{30}$

Or, $0.000722^{\frac{1}{30}}$ = $1-\frac{Rate}{100}$

or, 0.7857 =  $1-\frac{Rate}{100}$

So, $\frac{Rate}{100}$ = 1- 0.7857 = 0.2143

So, Decrease rate of interest = 21.43

Hence The percentage decrease in price is 21.43 Answer

Answer 2

Answer:

A) 6%

Step-by-step explanation: