Question

After getting married, Joe, 32, and Melinda, 29, decide to take out life insurance policies. Joe would like a 15-year term policy and Melinda would like a 20-year term policy. They each want a $300,000 policy. How much can Joe and Melinda expect to pay in premiums the first year? For age 32, a male 15-year term policy is $3.32 and a 20-year term policy is $5.45. For age 29, a female 15-year term policy is $2.58 and a 20-year term policy is $4.96. Select the best answer from the choices provided.

1) $2,478
2) $2,484
3) $1,488
4) $2,409

Answer 1

Joe's annual life insurance premium would be $996, and Melinda's would be $1,488. The combined total premium for the first year for both would be 2) $2,484.

Step-by-step explanation:

The life insurance premiums for Joe and Melinda in the first year can be calculated by multiplying their respective policy rates by the amount of coverage they want. Joe wants a 15-year term policy, which for a 32-year-old male, is $3.32 per $1,000 of coverage. Melinda wants a 20-year term policy, which for a 29-year-old female, is $4.96 per $1,000 of coverage.

First, we calculate Joe's premium: 300 (amount of coverage in thousands) × $3.32 (Joe's rate) = $996 per year. Then, we calculate Melinda's premium: 300 (amount of coverage in thousands) × $4.96 (Melinda's rate) = $1,488 per year.

Now, to find out how much they can expect to pay combined: $996 (Joe's premium) + $1,488 (Melinda's premium) = $2,484.