Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

An insurance salesman offers you a Cash Value life insurance policy for $250,000 (payable on your death or at age 95, whichever happens first) for

An insurance salesman offers you a Cash Value life insurance policy for $250,000 (payable on your death or at age 95, whichever happens first) for monthly premiums of $150. He indicates that cash value insurance is a great investment. From reading the textbook you know cash value life insurance assumes a 4% annual return. If you die at 95 is it a good investment, assuming you are offered the policy when you are 25? a) What is the future value of the premiums when you turn 95? b) At what annual interest rate would I earn $250,000 investing $150 a month for 70 years? c) I purchased a cash value policy with a $250,000 death benefit on my 25th birthday. Based on a 4% annual return and $150 monthly premium, I would need to die before I reach the age of X to make it a good investment.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Enterprise Risk Management In Finance

Authors: David L. Olson, Desheng Dash Wu

1st Edition

1349691038, 978-1349691036

More Books

Students also viewed these Finance questions

Question

=+6. For the data in Exercise 2,

Answered: 1 week ago

Question

Develop a program for effectively managing diversity. page 317

Answered: 1 week ago