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I REALLY NEED HELP WITH THIS!

The sample life insurance premium table illustrates the monthly premium for every $25,000 of coverage.

Chloe is 25 and smokes. How much would she save a year on a $100,000 policy if she quit smoking? Show your work or explain how you got your answer.

I REALLY NEED HELP WITH THIS! The sample life insurance premium table illustrates-example-1

1 Answer

7 votes

Answer:

$84

Explanation:

Since Chloe wants a policy for $100,000, she will pay $100,000/$25,000 = 4 times the amount shown in the table. The table amounts are for monthly premiums, so the annual amount will be 12 times that. In all, Chloe will pay annually an amount that is 4·12 = 48 times the amount in the table.

As a female smoker, she will pay annually for a $100,000 policy ...

48 · $5.25 = $252.00

If Chloe were a non-smoker, she would pay annually ...

48 · $3.50 = $168.00

If the insurance company considers a smoker who quits to be a non-smoker, then by quitting, Chloe could save ...

$252 -168 = $84 . . . annually

_____

Alternate means to the end

Of course, it is easier to multiply the difference in rates by 48:

48·($5.25 -3.50) = 48·$1.75 = $84 . . . . annual savings

User Sourabh Agrawal
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