Tina Parker, a single mother, is 20 years old. She has called on you for an insurance consultation. Her objective is to purchase life insurance protection for the next 10 years while her children are growing up. Tina tells you that she can afford about $250 per year for insurance premiums. You have suggested either a 10-year term policy or a whole life policy.Rounded to the nearest thousand, how much insurance coverage can Tina purchase under each policy? Hint: Divide her annual premium allowance by the rate per $1,000 for each policy.If she should die in the next 10 years, how much more will her children receive under the term insurance?If she should live beyond the 10th year, what are her nonforfeiture options with the whole life policy? Business Decision: The Consultation20. Tina Parker, a single mother, is 20 years old. Shehas called on you for an insurance consultation.Her objective is to purchase life insuranceprotection for the next 10 years while her children©iStock.com/MarsBarsare growing up. Tina tells you that she can afford about $250 per year forinsurance premiums. You have suggested either a 10-year term policy ora whole life policy.a. Rounded to the nearest thousand, how much insurance coverage canTina purchase under each policy? Hint: Divide her annual premiumallowance by the rate per $1,000 for each policy.b. If she should die in the next 10 years, how much more will herchildren receive under the term insurance?c. If she should live beyond the 10th year, what are her nonforfeitureoptions with the whole life policy?

20a). Insurance coverage under each policy:Term Policy: Annual premium per $1,000 of coverage =…

Answered: Business Decision: The Consultation 20.…

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Tina Parker, a single mother, is 20 years old. She has called on you for an insurance consultation. Her objective is to purchase life insurance protection for the next 10 years while her children are growing up. Tina tells you that she can afford about $250 per year for insurance premiums. You have suggested either a 10-year term policy or a whole life policy.
1. Rounded to the nearest thousand, how much insurance coverage can Tina purchase under each policy? Hint: Divide her annual premium allowance by the rate per $1,000 for each policy.
2. If she should die in the next 10 years, how much more will her children receive under the term insurance?
3. If she should live beyond the 10th year, what are her nonforfeiture options with the whole life policy?