Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN: 9780357033609
Author: Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher: Cengage Learning
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Chapter 10, Problem 1FPE
Summary Introduction
To Discuss: Home-insurance policy and co-insurance clause.
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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?
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Chapter 10 Solutions
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
Ch. 10 - Prob. 1LOCh. 10 - Identify the types of coverage provided by...Ch. 10 - Prob. 3LOCh. 10 - Prob. 4LOCh. 10 - Prob. 5LOCh. 10 - Choose a property and liability insurance agent...Ch. 10 - Prob. 1FPECh. 10 - Last year, Thea and Rory Brown bought a home with...Ch. 10 - Prob. 3FPECh. 10 - Prob. 4FPE
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- You are a dual-income, no-kids family. You and your spouse have the following debts: Mortgage = $261,000; Auto loan = $10,000; Credit card balance = $2,150; and other debts = $6,200. Further, you estimate that your funeral will cost $9,000. Your spouse expects to continue to work after your death. Using the DINK method, what should be your need for life insurance? Total insurance need $ 288,350arrow_forward2. Your dad applied for a term life insurance (provides the insured person with a coverage for a specified period of time of one, five or more years), He got a flexible policy (allows the insured person to change certain components of the insurance plan) because some payment options include a policy payout (insurance proceeds) as soon period achieved or upon contingency (death or accident). Some companies offer insurance products that can be availed only upon death. Because of this better option, your dad decided to avail of insurance A's flagship insurance product. Your dad's contribution per year is P20,000 that earns 6% compounded monthly for 20 years. How much will be paid out to your dad after 20 years by insurance A? as the targetarrow_forward9. If Diana wants a life insurance policy that will provide both a fixed death benefit and guaranteed cash value, what type of policy should she consider buying? a. annual renewable term life insurance b. universal life insurance c. whole life insurance d. variable universal life insurancearrow_forward
- 1. Alex owns a home with a replacement value of $320,000. The homeowners policy has an 80% coinsurance clause and a face value of $240,000. Damage caused by a fire costs $125,280 to repair. What compensation will the insurance company pay? 2. Using Table 19-5 and 19-6, find the annual premium for an automobile insurance policy for Sandra who has a good credit rating. She lives in Territory 1 and buys 50/100/50 coverage for her liability protection. Sandra's vehicle is Model Class 2 and is five years old. In addition to the liability coverage, she purchased comprehensive and collision insurance with a $250 deductible on comprehensive and a $500 deductible on collision. TABLE 19-5 Annual Automobile Liability Insurance Premiums Territory 1 Territory 2 Liability Limits BAD GOOD ОСС GOOD ОСС BAD 50/100/50 385 600 846 354 552 778 100/300/100 425 682 961 391 627 884 250/500/250 460 750 1036 423 690 953 500/1000/500 530 843 1208 488 776 1111 GOOD = good credit; OCC = occasional payments past…arrow_forwardBarbara has homeowner’s insurance with $100001 face amount.She recently incurred fire damage of $50000 during the policy period. If the insurer values the home to be $150000, what would her insurance benefit before the deductible? Choices: $33334 $100000 $0 $50001arrow_forwardCindy Schultz was recently hired at Bradonly Health Care. Cindy is in her 30s and in great health. She wants a flexible insurance plan and a tax-free savings plan. Which of the following would be the best option for Cindy? a. HDHP b. PPO c. Medicaid d. HMOarrow_forward
- Consider a worker, Janice, who has the option to purchase DI (disability insurance) on the private market. Janice becomes disabled with probability q = 0.01. She can purchase DI by paying the premium р. If the Janice is disabled, she will earn no income. But if she is insured, she will receive a total payment of $15,000 from the insurance company (her consumption will be $15,000). If the Janice is not disabled, she earns an income of $20,000. She has utility: U = 3C3 where C is the amount of consumption. Determine the actuarially fair insurance premium, p". Write down the expected utility function for Janice if she purchases insurance at the actuarially fair price. Will Janice choose to purchase this disability insurance? Explain. What is the most she would be willing to pay for DI insurance?arrow_forwardRobert wishes to obtain auto insurance. He wants 10/20/5 liability coverage, $250 deductible collision, and $100 deductible comprehensive. He lives in territory 3 and has been assigned to driver class 3 with a rating factor of 1.65. Based on Table 19-6 and Table 19-7, what would be his total premium (in $), if his 5-year old car is in model class X? Round your answer to the nearest cent. $arrow_forwardYour cousin and her partner have a combined gross income of $10,111 and monthly expenses totaling $3,205. They plan to buy a house with a mortgage whose monthly PITI will be $2,000. (a) What is your cousin and her partner's combined housing expense ratio? (b) What is their total obligations ratio? (c) For what kind of mortgage can they qualify, if any? (d) If they do not qualify for an FHA mortgage, by how much should they reduce their monthly expenses in order to be eligible? (Set up an equation and solve it.)arrow_forward
- ii. If a life insurance company insures 50 females age 25 for $40,000, 10- year term policies, how much would they expect to pay out? Solvearrow_forwardKrista and Landor are new parents. They have a two-month-old baby girl and they are considering expanding their family in the future. They have purchased life insurance with a child coverage rider in the amount of $5,000. Unfortunately, their baby girl becomes gravely ill and passes away. How will the insurer deal with their death claim relating to the child coverage rider? Select one: a. b. The insurer will pay the claim for the full amount. The insurer will pay a claim for only half of the full amount to keep the child coverage rider in force for the next child. c. The insurer will deny the claim as Krista and Landon did not purchase accidental death insurance for theirarrow_forwardCalli feels that the best way to determine how much life insurance she needs is to use the capital drawdown method. If inflation is 2.1% and she wants to have enough life insurance to provide her family with $54,000 for 32 years, how much life insurance does she need? Use the capital drawdown method to calculate the life insurance she needs and input your answer to the nearest dollar.arrow_forward
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Pfin (with Mindtap, 1 Term Printed Access Card) (...FinanceISBN:9780357033609Author:Randall Billingsley, Lawrence J. Gitman, Michael D. JoehnkPublisher:Cengage Learning
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ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Cengage Learning