Lynn Calculated the Future Value of the First Twenty Premiums

question 48

Multiple Choice

Lynn calculated the future value of the first twenty premiums she will pay under her nonparticipating whole life insurance policy.Then she subtracted the cash value after 20 years.Next,she divided this value by the future value annuity due factor for 20 years to arrive at an annual cost of insurance.Finally,she divided the annual cost by the number of thousands of dollars of life insurance purchased to arrive at the cost per thousand per year.Lynn calculated the

• A)traditional net cost per thousand per year.
• B)the Linton Yield.
• C)the surrender cost per thousand per year.
• D)the net payment cost per thousand per year.

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Definitions:

Standard Deviation

The measure of the dispersion or variability in a set of numbers, indicating how spread out the numbers are from the mean.

Variance

Measures the spread between numbers in a dataset, indicating how much the data points differ from the mean.

Significantly More

A statistical term indicating that an observed effect or difference is large enough that it is unlikely to have occurred by chance, based on a set significance level.

Independent Sample Variances

Variability measures of two or more independent samples, analyzed to understand difference across populations.