Life Insurance — Unit test Answers

You put $125.32 at the end of each month in an investment plan that pays 2.5% interest, compounded monthly. How much will you have after 23 years? Round to the nearest cent.a.$46,683.28b.$4,564,471.88c.$2,949.39d.$3,832.84

Four years ago, Sam invested in Grath Oil. She bought three of its $1,000 par value bonds at a market price of 93.938 and with an annual coupon rate of 6.5%. She also bought 450 shares of Grath Oil stock at $44.11, which has paid an annual dividend of $3.10 for each of the last ten years. Today, Grath Oil bonds have a market rate of 98.866 and Grath Oil stock sells for $45.55 per share. Use the scenario above to select the best answer. a. It is equally likely that the company would suspend paying interest on the bonds and dividends on the stock. b. Both the coupon rate and the dividend rate are fixed and cannot change. c. The bonds showed a higher percentage return than that of the stocks. d. The amount of money received annually in interest (on the bonds) and in dividends (on the stocks) depends on the current market prices. Please select the best answer from the choices provided

Determine the amount needed such that when it comes time for retirement, an individual can make semiannual withdrawals in the amount of $15,265 for 35 years from an account paying 4.5% compounded semiannually. Round your answer to the nearest cent. a. $938,272.00 b. $941,790.00 c. $535,528.03 d. $547,577.41 Please select the best answer from the choices provided

The following table list two investment plans, A and B. Given this information, determine which investment is an ordinary annuity and the future value of the ordinary annuity after one year, given that both investments, A and B, compound interest monthly at the rate of 3.5%. Round to the nearest cent. a. Investment A is an ordinary annuity with $3,918.03 in the account after 1 year. b. Investment B is an ordinary annuity with $3,918.03 in the account after 1 year. c. Investment A is an ordinary annuity with $3,906.64 in the account after 1 year. d. Investment B is an ordinary annuity with $3,906.64 in the account after 1 year Please select the best answer from the choices provided

Maria, age 28, wants to pay no more than $300 a year in life insurance. What is the face value of the largest 20-year term policy she can buy without spending more than $300 annually? a. $234,000 b. $158,000 c. $11,000 d. $567,000 Please select the best answer from the choices provided

Solve the problem. Round to the nearest cent.Jason’s savings account has a balance of $1847. After 5 years, what will the amount of interest be at 6% compounded semiannually?a.$294.18c.$554.10b.$635.21d.$624.70

Will is 30 years old and works for a company that matches his 401(k) contribution up to 3%. The interest rate for his 401(k) is 7.13%. If he puts away 9% of his $41,000 salary every year, how much would he have saved in 10 years? Round your answer to the nearest cent.a.$52,835.72b.$56,602.91c.$68,395.76d.$73,272.37

In order to make premiums more affordable for their customers, Leroux Health Insurance is considering some changes to one of the plans they offer. Both the current options and proposed changes are outlined in the charts below. Leroux Health InsurancePlan AProposed Changes Cost: Monthly Premium: $248.00 $203.00 Annual Deductible: $ 5,500.00 $8,500.00 Co-pays: Brand-name Prescriptions $35.00 $30.00 Generic Prescriptions $15.00 $10.00 Visits: Primary Care Physician: $40.00 $30.00 Specialist: $60.00 $45.00 Urgent Care: $125.00 $90.00 Emergency Room: $325.00 $250.00 If Kevin is currently insured under Leroux for his medical insurance under Plan A, how will the proposed changes affect his health care costs?a.Costs for regularly scheduled health care will go down, but Kevin may end up paying more if he finds himself seriously ill or injured.b.Costs for regularly scheduled health care will go up, but Kevin will probably pay less than he would have if he finds himself seriously ill or injured.c.Both the cost for regularly scheduled health care and the cost for emergency health care will go down, making the changes very good for Kevin.d.Both the cost for regularly scheduled health care and the cost for emergency health care would go up, contradicting the intentions of Leroux Insurance.

The health care Jimmy’s employer offers is a fee-for-service plan in which Jimmy and his family must pay for $12,500 in health related services in a calendar year before the insurance company begins to pay. Jimmy and his family have several health related issues that demand $685.00 each month. If one of Jimmy’s children were to become seriously injured at the end of the year, how much more would Jimmy and his family need to pay before the insurance company begins to assume responsibility? a. $984.58 b. $4,280.00 c. $11,815.00 d. $14,417.92 Please select the best answer from the choices provided

Angelo, age 40, is comparing the premium for a $125,000 whole life insurance policy he may take now and the premium for the same policy taken out at age 45. The Annual Life Insurance Premium (per $1000 of face value) for a 40-year-old male is 22.60 and for a 45-year-old male is 27.75. What would be the difference in total premium costs over 20 years for this policy at the two age levels? a. $69,375 b. $11,725 c. $12,875 d. $644 Please select the best answer from the choices provided

Tom is considering making changes to his policy to make insurance more affordable. Which of the following statements is not something Tom should consider when making changes to his policy? a.Increasing the deductible on collision insurance will reduce his overall monthly and annual expense, but will lead to more out-of-pocket expense if he is in a collision.b.Removing comprehensive insurance will reduce his overall expense, but will leave Tom entirely responsible for the cost of a new windshield if he hits a rock on the highway.c.Increasing the limits on his bodily injury insurance will reduce his overall expense by putting greater limits on how much the insurance company will pay for injuries.d.Removing property damage insurance will reduce his overall expense, but will leave Tom responsible for the cost of repairs to any other cars involved with Tom in a collision.

In an effort to reduce cost on auto insurance, Sophia has lowered each component of her current plan to the cheapest possible option. Sophia’s current insurance agency is Fret-No-More Auto Insurance, whose policy options are listed below. The annual premium for Sophia’s current policy is $511.31. What decrease in her annual premium will Sophia see after the change?Fret-No-More Auto Insurance Type of Insurance CoverageCoverage LimitsAnnual PremiumsBodily Injury $25/50,000$21.35 $50/100,000$32.78 $100/300,000$42.10 Property Damage$25,000 $115.50 $50,000 $142.44 $100,000 $193.78 Collision$100 deductible$490.25 $250 deductible$343.33 $500 deductible$248.08 Comprehensive$50 deductible$105.79 $100 deductible$88.23 a.$20.59b.$38.15c.$57.10d.$60.88

David has a bank account which pays interest at the rate of 1.5% per year, compounded annually. Determine what amount David must have in the bank, given that he would like to draw an annual salary of $32,635.15 from his account at the end of each year for 30 years. Round to the nearest cent.a.$783,760.48b.$979,054.50c.$1,225,080.50d.$795,516.88

Solve the problem. Round to the nearest cent.Mathew knows that he will need to buy a new car in 4 years. The car will cost $15,000 by then. How much should he invest now at 10%, compounded quarterly, so that he will have enough to buy a new car?a.$12,340.54c.$10,104.37b.$11,269.72d.$9313.82

Solve the problem. Round to the nearest cent.Great Dish believes that it will need new equipment in 8 years. The equipment will cost $26,000. What lump sum should be invested today at 12%, compounded semiannually, to yield $26,000?a.$20,186.02c.$16,388.00b.$16,145.82d.$10,234.80