Jacob wants to buy a $500,000 15-year term life policy, and the annual premium rate (per $1000 of face value) for his age group is $6.78. If Jacob lives until the end of the term of his policy, how much will Jacob have paid in premiums overall?
a.
$101,700
b.
$3,390
c.
$50,850
d.
$73,746
The face value of the policy is $500,000 so that's 500*$1000 = $<<500*1000=500000>>500,000
Over the 15 year term, that premium rate comes to 6.78*500 = $<<6.78*500=3390>>3,390 a year
So over the course of 15 years he will have paid 15*3390 = $<<15*3390=50850>>50,850. Answer: \boxed{c}.
To calculate the amount Jacob will have paid in premiums overall, we need to determine the annual premium and the number of years in the term.
First, we need to find out the annual premium. The rate per $1000 of face value is $6.78. Since Jacob wants to buy a $500,000 policy, we divide the face value by 1000 and multiply by the rate:
Annual premium = (face value / 1000) * rate
= (500,000 / 1000) * 6.78
= 500 * 6.78
= $3,390
Next, we need to calculate the number of premium payments Jacob will make over the 15-year term. Since it is a 15-year term policy, Jacob will make 15 premium payments.
Finally, to find the total amount Jacob will have paid in premiums overall, we multiply the annual premium by the number of premium payments:
Total amount paid in premiums = Annual premium * Number of premium payments
= $3,390 * 15
= $50,850
Therefore, Jacob will have paid a total of $50,850 in premiums overall.
The correct answer is c. $50,850.