Calculate the cash surrender value for Lee Chin, age 38, who purchased a $290,000 straight life policy. At the end of year 5, Leestopped paying premiums. (Use Table 20.2.)Cash surrender value TABLE 20.2Nonforfeiture options based on $1,000 face valueYearsinsurancepolicy inforce5101520Cashvalue2996148265STRAIGHT LIFEAmount ofpaid-upinsurance86259371550Option 1: Cash value$200,000/$1,000 = 200 × $148 = $29,600Option 2: Reduced paid-up insurance$200,000/$1,000 = 200 × $371 = $74,200EXTENDEDTERMYears Days91761653009182021Cashvalue71186317475Option 3: Extended term insuranceBob could continue this $200,000 policy for 20 years and 165 days.20-PAYMENT LIFEEXTENDEDTERMAmount ofpaid-upinsurance Years Days2201919052128781321,000195176Life20-YEAR ENDOWMENTCashvalue923196101,000Amount ofpaid-upinsurance2295207901,000EXTENDEDTERMYears Days231403016035300Life

In insurance there are premiums to be paid each year and if you stop payment of insurance premium…

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FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Calculate the cash surrender value for Lee Chin, age 38, who purchas stopped paying premiums. (Use Table 20.2.) Cash surrender value