angelo, age 40, is comparing the premium for a $125,000 whole life insurance policy he may take now and the…

angelo, age 40, is comparing the premium for a $125,000 whole life insurance policy he may take now and the premium for the same policy taken out at age 45. the annual life insurance premium (per $1000 of face value) for a 40 - year - old male is 22.60 and for a 45 - year - old male is 27.75. what would be the difference in total premium costs over 20 years for this policy at the two age levels? a. $69,375 b. $11,725 c. $12,875 d. $644 please select the best answer from the choices provided

angelo, age 40, is comparing the premium for a $125,000 whole life insurance policy he may take now and the premium for the same policy taken out at age 45. the annual life insurance premium (per $1000 of face value) for a 40 - year - old male is 22.60 and for a 45 - year - old male is 27.75. what would be the difference in total premium costs over 20 years for this policy at the two age levels? a. $69,375 b. $11,725 c. $12,875 d. $644 please select the best answer from the choices provided

Answer

Explanation:

Step1: Calculate annual premium at age 40

The face - value of the policy is $125000. The premium per $1000 of face - value for a 40 - year - old male is $22.60. The number of $1000 units in $125000 is $\frac{125000}{1000}=125$. So the annual premium at age 40 is $22.60\times125 = 2825$.

Step2: Calculate annual premium at age 45

The premium per $1000 of face - value for a 45 - year - old male is $27.75. The number of $1000 units in $125000 is 125. So the annual premium at age 45 is $27.75\times125=3468.75$.

Step3: Calculate the annual difference in premiums

The annual difference in premiums is $3468.75 - 2825=643.75$.

Step4: Calculate the 20 - year difference in premiums

The 20 - year difference in premiums is $643.75\times20 = 12875$.

Answer:

C. $12,875