An insurance company is offering a new policy to its customers. Typically the policy isbought by a parent or grandparent for a child at the child's birth. For this policy, thepurchaser (say, the parent) makes the following six payments to the insurance company:First birthdaySecond birthdayThird birthdayFourth birthdayFifth birthdaySixth birthday$780$780$880$850$980$950After the child's sixth birthday, no more payments are made. When the child reaches age65, he or she receives $280,000. If the relevant interest rate is 10 percent for the first sixyears and 7 percent for all subsequent years, what would the value of the deposits bewhen the policy matures? (Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.)

Variables in the question: BirthdayPayment ($)1st7802nd7803rd8804th8505th9806th950Rate for the…

Answered: An insurance company is offering a new…

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter5: Gross Income: Exclusions

Section: Chapter Questions

Problem 5DQ

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An insurance company is offering a new policy to its customers. Typically, the policy is bought by a parent or grandparent for a child at the child’s birth. The purchaser (say, the parent) makes the following six payments to the insurance company: First birthday: $ 820 Second birthday: $ 820 Third birthday: $ 920 Fourth birthday: $ 850 Fifth birthday: $ 1,020 Sixth birthday: $ 950 After the child’s sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $320,000. The relevant interest rate is 10 percent for the first six years and 7 percent for all subsequent years. Find the future value of the payments at the child's 65th birthday.
An insurance company is offering a new policy to its customers. Typically the policy is bought by a parent or grandparent for a child at the child’s birth. For this policy, the purchaser (say, the parent) makes the following six payments to the insurance company: First birthday $ 910 Second birthday $ 910 Third birthday $ 1,010 Fourth birthday $ 850 Fifth birthday $ 1,110 Sixth birthday $ 950 After the child’s sixth birthday, no more payments are made. When the child reaches age 65, he or she receives $410,000. If the relevant interest rate is 13 percent for the first six years and 7 percent for all subsequent years, what would the value of the deposits be when the policy matures? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Insurance underwriting relies heavily on statistics to determine the amount of insurance premium to charge. The probability that a 25-year-old female will live another year is 0.99786 based on data from the national registry agency. Calculate the insurance premium an insurance company would charge to break even on a 1 year $0.5million term-life insurance policy?
Assume that you have calculated: (a) premiums for life insurance policies and (b) payments to annuitants based upon an assumption that everybody dies before attaining age 101. Now you discover that a significant number of your policy owners are likely to live beyond age 101 and some will live to age 121. How will that affect your business?
a parent on the day of the child is born wishes to detrmine what lump sum would have to be paid into an account annually in order to withdraw 20,000 each on the childs 18th,19th,20th and 21st birthdays
\\nAssume you have established a trust account for your child, which she will have access to once she reaches the age of 25. This daughter just turned 24 today, so the first payment will occur at the end of this year, upon her 25th birthday. Under the terms of the trust agreement, she will receive $10,000 upon her 25th birthday, $20,000 upon her 26th birthday, $30,000 on her 27th birthday, and $50,000 on her 28th birthday. If she puts all of these payments into savings, and she can earn a rate of 5%, how much will she have in total on her 28th birthday? Calculate the FV of these cash flows at the end of year 4 (her 28th birthday).\\n
To illustrate the preceding discussion, suppose that a father, on the day his son is born, wishes to determine what lump amount would have to be paid into an account bearing interest of 12% per year to provide withdrawals of $2,000 on each of the son’s 18th, 19th, 20th, and 21st birthdays.
At the time of her grandsons birth, a grandmother deposits 3000 in an account that pays 6.5% compounded monthly. What will be the value of the account at the child’s 21st birthday, assuming that no other deposits or withdrawals are made during this period
A parent on the day the child is born wishes to determine what lump sum would have to be paid into an account bearing interest at 5% compounded annually, in order to withdraw P20,000 each on the child's 18th, 19th, 20th and 21st birthdays. How much is the lump sum amount?
Under the TRAIN law, the amount of premium allowed per family during thetaxable year for health and/or hospitalization insurance is P2,500. TRUE OR FALSE?
A parent on the day that child is born wishes to determine what lump sum would have to be paid into an account bearing interest of 5% compounded annually, in order to withdraw P20,000 each on the child’s 18th, 19th, 20th, and 21st birthdays? How many periods with no payment made does the problem have? A. 5 B. 4 C. 18 D. 17
If Yolanda's insurance company cancels her fire insurance policy after 204 days, how much of the $682.00 annual premium will she receive as a refund (in $)? (Round you answer to the nearest cent.) $

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