If Jesse wants to buy a $75,000 10-year term life insurance policy, and the annual premium rate (per $1000 of face value) for his age group is $2.34, how much is Jesse’s annual premium?
a.
$175.50
b.
$3,205.12
c.
$234.00
d.
$1,755.00
To determine Jesse's annual premium, we need to calculate the total premium based on the face value of the policy and the annual premium rate per $1000 of face value.
The face value of the policy is $75,000 and the annual premium rate per $1000 of face value is $2.34.
To calculate the annual premium, we multiply the face value by the premium rate:
Annual premium = face value / 1000 * premium rate
= $75,000 / 1000 * $2.34
= $175 * 2.34
= $409.50
Therefore, Jesse's annual premium is $409.50.
The closest answer choice is option a. $175.50, which is the correct answer.
To calculate Jesse's annual premium, we can use the following formula:
Premium amount = Face value * Premium rate
Where:
Face value = $75000
Premium rate = $2.34/1000
First, let's convert the premium rate to a decimal:
Premium rate = 2.34/1000 = 0.00234
Now, we can calculate the annual premium:
Annual premium = Face value * Premium rate
= $75000 * 0.00234
= $175.50
Therefore, the correct answer is (a) $175.50.