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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 $550 per year for insurance premiums. You have suggested either a 10-year term policy or a whole life policy. (a) Using Table 19-1, rounded to the nearest thousand, how much insurance coverage (in $) can Tina purchase under each policy? Hint: Divide her annual premium allowance by the rate per $1,000 for each policy. 10-year term policy whole life policy (b) If she should die in the next 10 years, how much more (in $) will her children receive under the term insurance? 2$ (c) Using Table 19-3, if she should live beyond the 10th year, determine her nonforfeiture options with the whole life policy. Option 1: Cash value (in $) Option 2: Reduced Paid-up Insurance (in $) Option 3: Extended Term (Enter your answer in years and an amount of days less than 365.) years, days

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 $550 per year for insurance premiums. You have suggested either a 10-year term policy or a whole life policy. (a) Using Table 19-1, rounded to the nearest thousand, how much insurance coverage (in $) can Tina purchase under each policy? Hint: Divide her annual premium allowance by the rate per $1,000 for each policy. 10-year term policy whole life policy (b) If she should die in the next 10 years, how much more (in $) will her children receive under the term insurance? 2$ (c) Using Table 19-3, if she should live beyond the 10th year, determine her nonforfeiture options with the whole life policy. Option 1: Cash value (in $) Option 2: Reduced Paid-up Insurance (in $) Option 3: Extended Term (Enter your answer in years and an amount of days less than 365.) years, days

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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TABLE 19-3 Nonforfeiture Options (per $1,000 of Face Value Issued to a Woman at Age 20) Whole Life Options 20-Payment Life Options 20-Year Endowment Options 2 3 2 3 Extended Extended Extended End Reduced Reduced Reduced Term Term Term of Cash Paid-Up Cash Days Value Paid-Up Cash Years Days Value Paid-Up Year Value Insurance Years Insurance Insurance Years Days 3 $ 1 $ 25 2 17 $ 29 $ 90 $ 39 $ 97 7 132 4 217 32 64 9. 23 73 212 14 86 91 233 19 204 7 54 99 13 142 101 367 23 152 186 381 26 310 10 98 186 17 54 191 496 30 206 324 512 32 117 15 157 314 21 218 322 789 34 142 647 794 37 350 20 262 491 25 77 505 1,000 -Life- 1,000 1,000 -Life- TABLE 19-1 Annual Life Insurance Premiums (per $1,000 of Face Value) Term Insurance Permanent Insurance 5-Year 10-Year Whole 20-Рауment Life 20-Year Term Term Life Endowment Age Male Female Male Female Male Female Male Female Male Female $33.22 $ 4.33 4.42 $ 2.32 $ 1.90 $ 4.01 4.12 18 $13.22 $11.17 $23.14 $19.21 $29.12 2.38 13.60 11.68 24.42 20.92 33.68 34.42 19 1.96 30.04 20 2.43 2.07 4.49 4.20 14.12 12.09 25.10 21.50 31.28 21 2.49 2.15 4.57 4.29 14.53 12.53 25.83 22.11 34.90 31.79 22 2.55 2.22 4.64 4.36 14.97 12.96 26.42 22.89 35.27 35.70 32.40 23 2.62 2.30 4.70 4.42 15.39 13.41 27.01 23.47 32.93 24 2.69 2.37 4.79 4.47 15.90 13.92 27.74 24.26 36.49 33.61 25 2.77 2.45 4.85 4.51 16.38 14.38 28.40 25.04 37.02 34.87 26 2.84 2.51 4.92 4.60 16.91 14.77 29.11 25.96 37.67 35.30 27 2.90 2.58 5.11 4.69 17.27 15.23 29.97 26.83 38.23 35.96 28 2.98 2.64 5.18 4.77 17.76 15.66 30.68 27.54 38.96 36.44 29 3.07 2.70 5.23 4.84 18.12 16.18 31.52 28.09 39.42 37.21 30 3.14 2.78 5.30 4.93 18.54 16.71 32.15 28.73 40.19 37.80 35 3.43 2.92 6.42 5.35 24.19 22.52 37.10 33.12 43.67 39.19 40 4.23 6.12 3.90 7.14 6.24 27.21 25.40 42.27 36.29 48.20 42.25 45 50 5.18 8.81 7.40 33.02 29.16 48.73 39.08 51.11 46.04 9.72 8.73 14.19 9.11 37.94 33.57 56.31 44.16 58.49 49.20 55 16.25 12.82 22.03 13.17 45.83 37.02 61.09 49.40 71.28 53.16 60 24.10 19.43 37.70 24.82 53.98 42.24 70.43 52.55 79.15 58.08
Transcribed Image Text:TABLE 19-3 Nonforfeiture Options (per $1,000 of Face Value Issued to a Woman at Age 20) Whole Life Options 20-Payment Life Options 20-Year Endowment Options 2 3 2 3 Extended Extended Extended End Reduced Reduced Reduced Term Term Term of Cash Paid-Up Cash Days Value Paid-Up Cash Years Days Value Paid-Up Year Value Insurance Years Insurance Insurance Years Days 3 $ 1 $ 25 2 17 $ 29 $ 90 $ 39 $ 97 7 132 4 217 32 64 9. 23 73 212 14 86 91 233 19 204 7 54 99 13 142 101 367 23 152 186 381 26 310 10 98 186 17 54 191 496 30 206 324 512 32 117 15 157 314 21 218 322 789 34 142 647 794 37 350 20 262 491 25 77 505 1,000 -Life- 1,000 1,000 -Life- TABLE 19-1 Annual Life Insurance Premiums (per $1,000 of Face Value) Term Insurance Permanent Insurance 5-Year 10-Year Whole 20-Рауment Life 20-Year Term Term Life Endowment Age Male Female Male Female Male Female Male Female Male Female $33.22 $ 4.33 4.42 $ 2.32 $ 1.90 $ 4.01 4.12 18 $13.22 $11.17 $23.14 $19.21 $29.12 2.38 13.60 11.68 24.42 20.92 33.68 34.42 19 1.96 30.04 20 2.43 2.07 4.49 4.20 14.12 12.09 25.10 21.50 31.28 21 2.49 2.15 4.57 4.29 14.53 12.53 25.83 22.11 34.90 31.79 22 2.55 2.22 4.64 4.36 14.97 12.96 26.42 22.89 35.27 35.70 32.40 23 2.62 2.30 4.70 4.42 15.39 13.41 27.01 23.47 32.93 24 2.69 2.37 4.79 4.47 15.90 13.92 27.74 24.26 36.49 33.61 25 2.77 2.45 4.85 4.51 16.38 14.38 28.40 25.04 37.02 34.87 26 2.84 2.51 4.92 4.60 16.91 14.77 29.11 25.96 37.67 35.30 27 2.90 2.58 5.11 4.69 17.27 15.23 29.97 26.83 38.23 35.96 28 2.98 2.64 5.18 4.77 17.76 15.66 30.68 27.54 38.96 36.44 29 3.07 2.70 5.23 4.84 18.12 16.18 31.52 28.09 39.42 37.21 30 3.14 2.78 5.30 4.93 18.54 16.71 32.15 28.73 40.19 37.80 35 3.43 2.92 6.42 5.35 24.19 22.52 37.10 33.12 43.67 39.19 40 4.23 6.12 3.90 7.14 6.24 27.21 25.40 42.27 36.29 48.20 42.25 45 50 5.18 8.81 7.40 33.02 29.16 48.73 39.08 51.11 46.04 9.72 8.73 14.19 9.11 37.94 33.57 56.31 44.16 58.49 49.20 55 16.25 12.82 22.03 13.17 45.83 37.02 61.09 49.40 71.28 53.16 60 24.10 19.43 37.70 24.82 53.98 42.24 70.43 52.55 79.15 58.08
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 $550 per year for insurance premiums. You have suggested either a 10-year term policy or a whole life policy. (a) Using Table 19-1, rounded to the nearest thousand, how much insurance coverage (in $) can Tina purchase under each policy? Hint: Divide her annual premium allowance by the rate per $1,000 for each policy. 10-year term policy $ whole life policy (b) If she should die in the next 10 years, how much more (in $) will her children receive under the term insurance? $ (c) Using Table 19-3 if she should live beyond the 10th year, determine her nonforfeiture options with the whole life policy. Option 1: Cash value (in $) $ Option 2: Reduced Paid-up Insurance (in $) $ Option 3: Extended Term (Enter your answer in years and an amount of days less than 365.) years, days
Transcribed Image Text: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 $550 per year for insurance premiums. You have suggested either a 10-year term policy or a whole life policy. (a) Using Table 19-1, rounded to the nearest thousand, how much insurance coverage (in $) can Tina purchase under each policy? Hint: Divide her annual premium allowance by the rate per $1,000 for each policy. 10-year term policy $ whole life policy (b) If she should die in the next 10 years, how much more (in $) will her children receive under the term insurance? $ (c) Using Table 19-3 if she should live beyond the 10th year, determine her nonforfeiture options with the whole life policy. Option 1: Cash value (in $) $ Option 2: Reduced Paid-up Insurance (in $) $ Option 3: Extended Term (Enter your answer in years and an amount of days less than 365.) years, days
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