Calculate the cash surrender value for Lee Chin, age 43, who purchased a $340,000 20-year endowment policy. At the end of year 10, Lee stopped paying premiums. (Use Table 20 2) Cash surrender value
Calculate the cash surrender value for Lee Chin, age 43, who purchased a $340,000 20-year endowment policy. At the end of year 10, Lee stopped paying premiums. (Use Table 20 2) Cash surrender value
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Calculate the cash surrender value for Lee Chin, age 43, who purchased a $340,000 20-year endowment policy. At the end of year 10,
Lee stopped paying premiums. (Use Table 20 2)
Cash surrender value
TABLE 20-2
Nonforfelture options based on $1,000 face value
STRAIGHT LIFE
20-PAYMENT LIFE
20-YEAR ENDOWMENT
Years
EXTENDED
EXTENDED
TERM
EXTENDED
Insurance
Amount of
TERM
Amount of
Amount of
TERM
policy in
force
Cash
pald-up
Cash
value
pald-up
Cash
pald-up
value
Insurance
Years Day
Years Day
Insurance
value
Insurance
Years
Day
15
29
86
91
71
220
19
190
92
229
23
140
10
96
259
18
76
186
521
28
195
319
520
30
160
15
148
371
20
165
317
781
32
176
6.10
790
35
300
20
265
550
21
300
475
1,000
Life
1.000
1,000
Life
Option 1: Cash value
Option 2: Reduced pald-up insurance
$200,000
$1.000
Option 3: Extended term insurance
$200.000
200 x $148 $29.600
= 200 x $371 = $74.200
Bob could continue this $200.000 policy
for 20 years iand 165 days
$1.000
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