A life insurance company issues a 10-year term insurance policyto a life aged 50, with sum insured $100 000. Level premiums are payablemonthly in advance throughout the term. You are given the following premium assumptions. (i) Commission is 20% of each premium payment in the first year (incurredat the premium payment times) and 5% of all premiums after the firstyear. (ii) Additional initial expenses are $100. (iii) Claim expenses are $250. (iv) The sum insured and claim expenses are payable one month after the dateof death. (v) Mortality follows the Standard Select Life Table, with UDD betweeninteger ages.(vi) i = 5%. Calculate the gross monthly premium.

A life insurance company issues a 10-year term insurance policyto a life aged 50, with sum insured $100 000. Level premiums are payablemonthly in advance throughout the term. You are given the following premium assumptions. (i) Commission is 20% of each premium payment in the first year (incurredat the premium payment times) and 5% of all premiums after the firstyear. (ii) Additional initial expenses are $100. (iii) Claim expenses are $250. (iv) The sum insured and claim expenses are payable one month after the dateof death. (v) Mortality follows the Standard Select Life Table, with UDD betweeninteger ages.(vi) i = 5%. Calculate the gross monthly premium.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 4P

See similar textbooks

Related questions

Q: A person contracts two obligations of $ 10,000.00 and $ 15,000.00 that will be paid, the first…

A: The company's aim will be to increase the profits of the company. The profits will be arrived at by…

Q: What is the annual insurance expense considering the following costs: Semiannual car insurance…

A: Insurance is agreement between insurer and insured where insurer agrees to compensate insured for…

Q: plan for an employee. Annual payments under the pension plan are equal to the employee's highest…

A: A projected benefit obligation (PBO) seems to be an actuarial calculation of how much money a…

Q: Ocean Spray has applied for a mortgage of $205,000. Interest is computed at 5.5 percent compounded…

A: The question is asked to determine the monthly payment, weekly payment, and biweekly payment. We…

Q: Prepare an amortization schedule for the first 3 payments (in $) of a $62,000 mortgage at 5% for 30…

A: Amortization of a loan refers to the gradual repayment of the loan over a period of time. The…

Q: Given the following information on a 20-year fixed-payment loan, determine the remaining balance…

A: The present value of a loan refers to the current value of the future cash flows that will be…

Q: For a $425,000 home mortgage loan with a 20-year term at 8% APR compounded monthly, compute the…

A: Excel Spreadsheet:

Q: Prepare the first row of a loan amortization schedule based on the following information. The loan…

A: Loan payment refers to the amount that is being paid by the borrower to the lender for the repayment…

Q: What lump-sum deposit is necessary to equal this amount if you assume an interest rate of 3.5%…

A: PV = P x [1 - {1 / (1 + r)^n}] / r Here, PV = Present Value P = Annual Payment i.e. $500 r =…

Q: The following facts for Storm plc apply to the pension plan for 2019. 1. Annual service cost is…

A: Pension worksheet summarizes all the entries to be recorded for the year in terms of the defined…

Q: You are purchasing a $79,500 house with monthly payments on a twenty-year note with interest at 6.8%…

A: Amortization Schedule For loans with flat payments, a loan amortisation schedule is a table that…

Q: Find the monthly house payments nessary to amortize the following loan. Find total payments and…

A: Loans can be secured and unsecured. The loan is the amount borrower takes from the bank or financial…

Q: Consider a home mortgage of $225,000 at a fixed APR of 3% for 25 years. a. Calculate the monthly…

A: In case of a home mortgage fixed monthly payments are made. The fixed monthly payment consists of…

Q: ABC Insurance offer term life insurance under the following terms: Guaranteed renewal Cover to age…

A: Why do the premiums increase as the age of the insured increases? Life insurance is a…

Q: Apostretirement plan promises health care coverage for all employees who retire after age 62 and…

A: Accumulated Post-retirement Benefit Obligation (ABOP) is the actual current value of benefits…

Q: A mortgage of $169,900 was taken out when the 5-year mortgage interest rate was 3.2% compounded…

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…

Q: Consider the following loan and find the following. Show your calculation below. Mortgage Annual…

A: Mortgage loan is a type of loan where a series of equal payments are made at equal interval. Such…

Q: You deposit st, 100 in a 2-year certificate of deposit (CD) earning 2.2% annual interest compounded…

A: Compound interest is the interest calculated upon original principal and interest cumulated from…

Q: Consider a home mortgage of $150,000 at a fixed APR of 6% for 30 years. a. Calculate the monthly…

A: To calculate the monthly payment for a mortgage, we can use the formula for the fixed monthly…

Question

(i) Commission is 20% of each premium payment in the first year (incurredat the premium payment times) and 5% of all premiums after the firstyear.

(ii) Additional initial expenses are $100.

(iii) Claim expenses are $250.

(iv) The sum insured and claim expenses are payable one month after the dateof death.

(v) Mortality follows the Standard Select Life Table, with UDD betweeninteger ages.(vi) i = 5%.

Calculate the gross monthly premium.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

The proceeds of $493000 death benefit are left on deposit with an insurance company for 10 years at an annual effective interest rate of 18.04 %. The balance at the end of 10 years is paid to the beneficiary in 125 equal monthly payments of X, with the first payment made at the end of 10 month from the end of deposit. During the payout period, interest is credited at an annual effective interest rate of 12.89 %. Calculate X. Answer: 41544.44
The EZ Credit Company offers to loan a college student $6,000 for school expenses. Repayment of the loan will be in monthly installments of $304.07 for 24 months. The total repayment of money is $7,297.68, which includes the original $6,000, $1,207.04 in interest charges, and $90.64 for a required life insurance policy covering the amount of the loan. Assume monthly compounding of interest. What nominal interest rate is being charged on this loan?
On july 1, Shady creek resort borrowed 290,000 cash by signing a 10 year, 10% installment note requiring equal payments each june 30 of 47,196. what amount of interest expense will be included in the first annual payment?
Jain Enterprises honors a short-term note payable. Principal on the note is $425,000, with an annual interest rate of 3.5%, due in 6 months. What journal entry is created when Jain honors the note?
Next Level Potter wishes to deposit a sum that at 12% interest, compounded semiannually, will permit 2 withdrawals: 40,000 at the end of 4 years and 50,000 at the end of 10 years. Analyze the problem to determine the required deposit, stating the procedure to follow and the tables to use in developing the solution.
Andrew Codilla has a present obligation of $10,500 that is to be paidinequal uniform amounts, each of which includes repayment of the debt (principal) andinterest of the debt, over a period of 6 years. If the effective interest rate per yearis 10%, what is the amount of the annual payment?
Calculate the short-term premium and refund for the policy (in $). Use Table 19-5, if necessary. AnnualPremium CanceledAfter CanceledBy Short-Term Premium Refund $570 25 days insured $ $
Use the following table to calculate the minimum premium an insurance company should charge for a USD 5 million three-year term life insurance contract issued to a man aged 60. Assume that the premium is paid at the beginning of each year and death always takes place halfway through a year. The risk-free interest rate is 6% per annum (with semiannual compounding). Age 60 61 62 Probability of death within one year 0.011407 0.012315 0.013289 Survival probability 0.85227 0.84254 0.83217 Life expectancy (years) 20.92 20.16 19.40
XYZ Sleep Disorder Clinic invests $106,944 for five years to retire a debt. Assuming the clinic can invest at 7 percent compounded annually, how
Andrews Inc. issues a $497,000, 10% 3-year mortgage note on January 1. The note will be paid in three annual installments of $200,000, each payable at the end of the year. What is the amount of interest expense that should be recognized by Andrews Inc. in the second year?
You are to make monthly deposits of $725 into a retirememt account that pays an APR of 10.1 percemt compoumded monthly. If your first deposit will be made one month from now, how large will your retirement account be in 33 years?
An insurance policy pays $50,000 immediately or $4,000 every 6 months for 10 years beginning now. What interest rate / is being used? You are given: a 19/06 11.1581 a- 11.24% 10.59% 9.93% 11.77% 19 055 11.6077 a- = 12.4622 20/05 201045 = 13.0079