Question 6 of 22
Use the table to answer the question.
The sample life insurance premium table illustrates the monthly premium for every $25,000 of coverage.
Age Nonsmoker Male Nonsmoker Female Smoker Male Smoker Female
Under 24 $3.00 $2.50 $4.50 $4.00
24 to 30 $4.00 $3.50 $6.15 $5.25
31 to 40 $5.50 $4.40 $9.00 $6.50
41 to 50 $7.50 $6.75 $13.00 $12.00
What is the insurance premium for a 42-year-old nonsmoking female who wants $125,000 in coverage?
A.
$33.75
B.
$41.50
C.
$58.25
D.
$60.00
The premium is $6.75 per $25,000 of coverage for a 42-year-old nonsmoking female, so for $125,000 of coverage, the premium would be:
$6.75 ÷ $25,000 = $0.00027 per dollar of coverage
$0.00027 x $125,000 = $33.75
Therefore, the answer is A. $33.75.
To calculate the insurance premium for a 42-year-old nonsmoking female who wants $125,000 in coverage, we need to find the premium for every $25,000 of coverage and then multiply that by the number of $25,000 increments in the desired coverage amount.
According to the table, for a nonsmoking female aged 41 to 50, the premium for every $25,000 of coverage is $6.75.
Since the desired coverage is $125,000, we divide $125,000 by $25,000 to find the number of $25,000 increments:
$125,000 / $25,000 = 5 increments
Now, we multiply the premium for every $25,000 by the number of increments:
$6.75 * 5 = $33.75
Therefore, the insurance premium for a 42-year-old nonsmoking female who wants $125,000 in coverage is $33.75.
The correct answer is option A. $33.75.