Prudent policy life insurance co. offers a 10 year term life insurance policy with a $250000...

Prudent policy life insurance co. offers a 10 year term life insurance policy with a $250000 benefit and annual premiums of $200, paid at the beginning of each year. If prudent can earn 8% on invested capital, what is the present value to the firm of the premiums from one policy, assuming the policy holder outlives the policy term?

Expert Solution

Annual premium = $200

Time Period = 10 years

Interest Rate ,= 8%

Calculating Present Value of Premium,

Using TVM Calculation,

PV = BEG[FV =0, PMT = 200, N = 10, I = 0.08]

PV = $1,449.38

Present Value of Premium = $1,449.38

jeff jeffy answered 2 years ago

An insurance company considers the present value of a 10-year term life insurance policy to be...

An insurance company considers the present value of a 10-year term life insurance policy to be $3,738. The premiums that the company collects are $55 at the beginning of every month for the 10 years. What monthly compounded nominal rate is implied in the calculation of the policy's value? A lottery prize of $2,250,000 per year, payable at the beginning of every year for 20 years can also be collected as a single lump sum payment of $23,500,000. What effective...

Suppose a life insurance company sells a $290,000 a year term life insurance policy to a...

Suppose a life insurance company sells a $290,000 a year term life insurance policy to a 20-year-old female for $200. The probability that the female survives the year is 0.999634. compare and interpret the expected value of this policy to the insurance company. the expected value is $___ (round to two decimal places as needed)

A life insurance company sells a $150,000 one year term life insurance policy to a 21-year...

A life insurance company sells a $150,000 one year term life insurance policy to a 21-year old female for $150. The probability that the female survives the year is .999724. Find the expected value for the insurance company.

suppose a life insurance company sells a $240,000 one year term life insurance policy to a...

suppose a life insurance company sells a $240,000 one year term life insurance policy to a 19 year old female for $270. the probability that the female survives the year is .999522. compute and interpret the expected value if this policy to the insurance company. the expected value is $______

A life insurance company sells a $250,000 1-year term life insurance policy to a 20-year old...

A life insurance company sells a $250,000 1-year term life insurance policy to a 20-year old male for $350. The probability this person survives the year is 0.98734. Compute the expected value of this policy to the insurance company to the nearest 0.01.

Suppose a life insurance company sells a $200,000 one-year term life insurance policy to a 23-year-old...

Suppose a life insurance company sells a $200,000 one-year term life insurance policy to a 23-year-old female for $190. The probability that the female survives the year is 0.999594. Compute and interpret the expected value of this policy to the insurance company.

Suppose a life insurance company sells a $160,000 one-year term life insurance policy to a 25-year-old...

Suppose a life insurance company sells a $160,000 one-year term life insurance policy to a 25-year-old female for $280. The probability that the female survives the year is 0.9996420 Compute and interpret the expected value of this policy to the insurance company. The expected value is $nothing. (Round to two decimal places as needed.)

Suppose a life insurance company sells a $190,000 one-year term life insurance policy to a 24-year-old...

Suppose a life insurance company sells a $190,000 one-year term life insurance policy to a 24-year-old female for $200. The probability that the female survives the year is .999461. Compute and interpret the expected value of this policy to the insurance company.

Suppose a life insurance company sells a $190,000 one-year term life insurance policy to a 20-year-old...

Suppose a life insurance company sells a $190,000 one-year term life insurance policy to a 20-year-old female for $330. The probability that the female survives the year is 0.999502. Compute and interpret the expected value of this policy to the insurance company.

Suppose a life insurance company sells a $230 comma 230,000 one-year term life insurance policy to...

Suppose a life insurance company sells a $230 comma 230,000 one-year term life insurance policy to a 19-year-old female for $230. The probability that the female survives the year is 0.999588. Compute and interpret the expected value of this policy to the insurance company.

Question