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Standard Insurance is developing a long-life insurance policy for people who outlive their retirement nest egg....
Standard Insurance is developing a long-life insurance policy for people who outlive their retirement nest egg. The policy will pay out $300,000 on your 85th birthday. You must buy the policy on your 62nd birthday. The insurance company can earn 8.5% on the purchase price of your policy. What is the minimum purchase price the insurance company should charge for this policy?
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Expert Solution
Present value=$300,000*Present value of discounting factor(rate%,time period)
=$300,000/1.085^23
=$45944.90(Approx).
jeff jeffy answered 2 years agoRelated Solutions
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