1.Mary has 500,000 and wishes to purchase a single- premium annuity. All other things being equal,...

1.Mary has 500,000 and wishes to purchase a single- premium annuity. All other things being equal, which of the following annuities will provide her with the smallest monthly liquidation payment ?

a)10 year period certain, joint and 80 % survivor, single premium

b)10 year period certain, joint and survivor, single premium

c)10 year period certain, joint and ? survivor, single premium

d)straight life annuity , single premium

Which of the following statements concerning renters insurance is false:

a) renters insurance is too expensive

b) my landlord’s insurance protects me and my stuff

c) the landlord is liable if someone trips in my apartment and gets injured

d) it is a Ho-6 policy

e) none of the above, in other words, all of the above statements are true concerning renters policy.

John (homeowner) slips and falls in the bathroom. His injury is covered by the a HO-3 policy under the medical payments (part B) coverage. True or false

Expert Solution

1. All the options have a single premium which means a lumpsum of 500,000 is used to buy the annuity. All else being equal, the longer the payment horizon of the Annuity, the lesser will be the monthly payments as there will be more number of payments for the same investment. Hence a straight life annuity will have the lowest monthly liquidation payment.

2. A Renters' insurance protects the renter against any kind of loss to his property. Since it covers only the personal belongings of the renter and not the dwelling itself, it is cheaper than the homeowners' insurance. Also, the homeowner is not responsible for the renters' belongings. HO-6 policy is only for homeowners. So options b,c, d and e are all false.

3. HO-3 policy only covers the property and personal belongings of the homeowner. There is a small medical coverage but it is for when a guest gets injured and not the owner himself. So the statement is False.

jeff jeffy answered 2 years ago

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