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Life Insurance - Modern Business Mathematics | MTH 130, Study notes of Mathematics

Monroe Community CollegeMathematics
Prof. Brigitte Martineau

Material Type: Notes; Professor: Martineau; Class: Modern Business Mathematics; Subject: Mathematics (MTH); University: Monroe Community College; Term: Unknown 1989;

Typology: Study notes

Pre 2010

Uploaded on 08/09/2009

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MTH 130 Modern Business Mathematics
Brigitte Martineau Section 12.3
Page 1 of 4
Life Insurance
Why life insurance?
There are four main types of life insurance:
1. Term Insurance
2. Straight-life Insurance
3. Limited Payment Life insurance
4. Endowment
1. Term Insurance
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2. Straight Life Insurance
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3. Limited Payment Life Insurance
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pf3
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Brigitte Martineau Section 12.

Life Insurance

Why life insurance?

There are four main types of life insurance:

  1. Term Insurance
  2. Straight-life Insurance
    1. Limited Payment Life insurance
    2. Endowment 1. Term Insurance

2. Straight Life Insurance

3. Limited Payment Life Insurance -

Brigitte Martineau Section 12.

4. Endowment

Annual premiums depend on: See Table 12.3.

Examples:

  1. Find the annual premiums

Age Sex Type of Insurance Face Value a. 25 M 20-Payment Life $25,

b. 30 F 20-Year Endowment $20,

c. 35 M 20-Year Term $15,

d. 40 F Straight Life $40,

Brigitte Martineau Section 12.

Examples:

  1. At age 25, Ben Ortiz purchased a $25,000 30-payment life policy. If he cancelled the policy when he was 40 years old, find the total premiums paid and his nonforfeiture options.
  2. Karl Nichols, age 20, just purchased a $25,000 20-year term insurance policy. If he had purchased a straight life policy with the same face value, and exchanged it for the cash value after 20 years, which would have been the better purchase and by how much?