Angus, who is 40 years old, is choosing between two term life insurance policies. Both offer a $500,000 death benefit, but the premiums differ based on age and term length. Option 1: 20-year term life policy Monthly premium: $35 Coverage: 20 years Death benefit: $500,000 Option 2: 30-year term life policy Monthly premium: $55 Coverage: 30 years Death benefit: $500,000 What is the total cost for each life insurance policy?
Answer
A
$6,000 for Option 1; $15,600 for Option 2
B
$7,200 for Option 1; $21,000 for Option 2
C
$8,400 for Option 1; $19,800 for Option 2
D
$8,400 for Option 1; $16,500 for Option 2
Explanation
Multiply each monthly premium by 12 months per year and the policy’s term. Option 1 costs $35 × 12 × 20 = $8,400. Option 2 costs $55 × 12 × 30 = $19,800, so the correct choice is $8,400 for Option 1 and $19,800 for Option 2.
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