Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Thabo is considering buying a whole life policy for $ 5 0 , 0 0 0 . That type of coverage usually has an annual

Thabo is considering buying a whole life policy for $50,000. That type of coverage usually has an annual premium of
$400. The coverage is participating and based on the insurers history with similar policies. The insurer is expecting to
pay $250 per year as dividends for the first 20 years. The cash value of each of the twenty years will be $250. It is known
that both dividends and cash value have not been adjusted in respect to the time value money. The discount factor for
time value of money is 5%.
Determine the annual surrender cost per thousand. (10 marks)

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

Step: 3

blur-text-image

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

Finance

Authors: Angelico Groppelli, Ehsan Nikbakht

2nd Edition

0812043731, 978-0812043730

More Books

Students also viewed these Finance questions