Question

The cost of $500,000 worth of 30-year-term life insurance for Rico is $66.60 per month. If Rico's employer covers 90% of this cost, how much is deducted from Rico's gross income per year for life insurance?

A.$59.94
B.$79.92
C.799.20
D.719.28

Answer 1

$79.92 is deducted from rico's gross income per year

Answer 2

In order to solve, we must first calculate how much money is deducted from Rico's paycheck per month.

This plan costs $66.60 per month, which Rico's employer covers 90%. To find Rico's monthly deduction, we multiply:

$66.60 x .90 = $59.94 < this is the amount Rico's EMPLOYER pays per month. Subtract this amount from $66.60 to find Rico's monthly payment:

$66.60 - $59.94 = $6.66 < this is how much is deducted from Rico's paycheck MONTHLY for the plan. The question, however, asks for the YEARLY amount. To calculate, simply multiply the monthly payment x 12:

$6.66 x 12 = $79.92 < this is the yearly amount deducted from Rico's account for this life insurance plan.

Answer: $79.92/B