Question
A cash value life insurance policy with a face value of $100,000 was prepared for John. John was only 30 at the time of purchase.
A cash value life insurance policy with a face value of $100,000 was prepared for John. John was only 30 at the time of purchase. The insurance company will pay the $100,000 death benefit at 95 if John is living. Assume payments are paid ahead of coverage.
a. At what annual premium will the insurance company make 0 profit assuming a 4% annual return.
b. At what monthly premium will the insurance company make 0 profit assuming a 4% return on premiums?
hint** Insurance Face Value = FV, Interest = 4 annual or 4/12 monthly, premiums=payments, n= number of years (annual) or monthly periods (years x 12).
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