Question

B's policy had a $1,000 annual premium. B has not paid it for 2 years and wants to put the policy back in force. The insurer charges 10% interest on overdue premiums. What does B have to pay in order to reinstate their policy?

Answer 1

$2200

Step-by-step explanation:

B pays $1000 annually meaning in the 2 years of not paying he now owes $2000.

10% of $2000 = $200, therefore, with that interest added B now owes $2200.

Therefore, in order to re-instate his policy, he will have to pay $2200

He may also need to pay an additional $1000 for that upcoming year depending on when the re-instating is occuring in the year