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34 votes
Alicia Bitman, age 30, plans to purchase a $200,000, 5-year term life insurance policy. What is the annual premium?

User Indrajeet Singh
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1 Answer

24 votes
24 votes

Answer: $770

Explanation:

Number of units to be purchased by Alicia:

= 200,000 / 1,000

= 200 units

Alicia is purchasing a 5-year term life insurance policy. At age 30, the cost per $1,000 unit of insurance is $3.85 for a female.

The formula for the annual premium is:

= Number of units purchased * Premium per $1,000

= 200 * 3.85

= $770

Alicia Bitman, age 30, plans to purchase a $200,000, 5-year term life insurance policy-example-1
User Blubberdiblub
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