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13. Winston asks Wilkin, Can I pay the premium monthly? Wilkin tells him, Yes, you do have the option of paying on a monthly basis.
13. Winston asks Wilkin, "Can I pay the premium monthly?" Wilkin tells him, "Yes, you do have the option of paying on a monthly basis." Winston is pleased; he tells Wilkin, "Good, I will pay $100 per month." Wilkin quickly interjects, "Well, if you choose to pay monthly, then you will have to pay $108 per month, not $100." Winston is puzzled. He says, "I don't understand, Wilkin. Why do I have to pay more than $100 per month?" Which of the following is likely to be Wilkin's response? (A) "That's just the way it is, Winston. All insurance companies follow this practice. I am sorry, there's nothing I can do." (B) "Winston, if we let you pay $100 per month for a $1,200 annual premium, then everyone will want to pay monthly and the insurance company will lose so much interest." (C) "Don't worry. I will talk to my manager and I am almost certain that she will allow you to pay $100 per month. Even she's not pleased with this extra charge that the insurance company levies." (D) "Winston, the insurance company charges more if you choose to pay monthly to cover additional administrative expenses and compensate it for the time value of money
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