Use Table 13-1 to Solve the Following Problem Involving Life

question 38

Short Answer

Use Table 13-1 to solve the following problem involving Life Tables.
-An individual who has just reached thei birthday wants to purchase a one-year term life-insurance policy that would pay $20,000 in the event of their death before the age of 70. What is the minimum amount that an insurance company must charge for this policy, assuming that this minimum amount would result in no gain or loss for the insurance company issuing many policies under the same circumstances?

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Definitions:

Price Level

The aggregate average price of goods and services in the economy at present.

Rate of Interest

The interest segment of a loan charged to the borrower, frequently expressed in terms of an annual percentage of the current loan balance.

Savings

The portion of disposable income not spent on consumption of goods and services, set aside for future use or investment.

Investment

The action of allocating resources, usually money, with the expectation of generating an income or profit.