Question

Tom Worker pays $900 annually for $60,000 worth of life insurance.

At the end of 10 years how much will Tom have paid in premiums?
A) 60,000
B) 9,000
C) 900

At the end of 10 years what will the cash value of his policy be?
A) 5,340
B) 53,400
C) 60,000

What will the ratio of cash value to premiums paid be (as a percent to the nearest tenth)?
A) 168.5%
B) 89%
C) 59.3%

Answer 1

Answer: 1) $9000

2) $5340

3)59.3%

Explanation:

Since we have given that

Worth of life insurance = $60000

Amount of premium = $900

After the end of 10 years,

1) Amount of premium Tom had paid is given by

`10* 900=\$9000`

2) At the end of 10 years ,

The cash value of his policy by using the table is given by

`(89)/(1000)* 60000\\\\=\$5340`

3) At the end of 10 years ,

Ratio of cash value to premiums paid be

`5340:9000\\\\=(5340)/(9000)* 100\\\\=59.3\%`