Calculate the reduced paid-up insurance for Lee Chin, age 42, who purchased a $200,000 straight-life policy. At the end of year 20, Lee stopped paying premiums. (Use Table 20.2.)
Calculate the reduced paid-up insurance for Lee Chin, age 42, who purchased a $200,000 straight-life policy. At the end of year 20, Lee stopped paying premiums. (Use Table 20.2.)
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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Calculate the reduced paid-up insurance for Lee Chin, age 42, who purchased a $200,000 straight-life policy. At the end of year 20, Lee stopped paying premiums. (Use Table 20.2.)
*****TABLE ATTACHED*****
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Transcribed Image Text:TABLE 20-2
Nonforfeiture options based on $1,000 face value
STRAIGHT LIFE
20-PAYMENT LIFE
20-YEAR ENDOWMENT
Years
EXTENDED
EXTENDED
EXTENDED
insurance
Amount of
TERM
Amount of
TERM
Amount of
TERM
policy in
Cash
paid-up
Cash
Cash
paid-up
Years Day value insurance
paid-up
force
value
insurance
Years Day value insurance
Years Day
5
29
86
9.
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
610
790
35
300
20
265
550
21
300
475
1,000
Life
1,000
1.000
Life
Option 1: Cash value
Option 2: Reduced paid-up insurance
Option 3: Extended term insurance
$200,000
$200,000
= 200 x $148 = $29,600
= 200 x $371 = $74,200
Bob could continue this $200,000 policy
for 20 years and 165 days.
$1.000
$1.000
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