Research the differences in the premium costs for a $100,000 whole life insurance policy and a...

Research the differences in the premium costs for a $100,000 whole life insurance policy and a $100,000 term life insurance policy. Which is more expensive? Why is there a price difference between the two? Which would you prefer and why?

Solutions

Expert Solution

Life insurance policy-

Premium of life insurance policy is charged yearly over the plolicy period. This policy period may very upto 70/80, years of age or upto the policy term.

Premium of this is payable on a scheduled date. This policy can be surrendered and one can get the surrender value of the policy.

On maturity or on death which ever is earlier nominee of the policy holder or Policy holder as the case may be will get the policy amount.

Therefore Premium paid per year is lower in case of Life Insurance Policy.

The Term life policy is again on the life of the insured, but the period is one year, if policy holder dies nominee of the policy holder will get the full amount.

Therefore Insurance companies are charging more yearly remium than it charges on life insurance policy.

Under term insurance policy if death does not occure within policy period then then policy premium is not refundable.

Premium under both the policy will depend on Age of the insured.

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Robert Weed is considering purchasing life insurance. He must pay a $180 premium for a $100,000 life insurance policy.

Robert Weed is considering purchasing life insurance. He must pay a $180 premium for a $100,000 life insurance policy. If he dies this year, his beneficiary will receive $100,000. If he does not die this year, the insurance company pays nothing and Robert must consider paying another premium next year. Based on actuarial tables, there is a 0.001 probability that Robert will die this year. If Robert wishes to maximize his EMV, he would not buy the policy if the...

A $100,000 life insurance policy for males aged 32 costs $10.06. For males aged 54, the...

A $100,000 life insurance policy for males aged 32 costs $10.06. For males aged 54, the policy costs $15.12. Find a linear function P(x)P(x) that expresses the price PP of the life insurance policy in terms of age xx. P(x)=

Walter owns a whole-life insurance policy worth $52,000 that directs the insurance company to pay the...

Walter owns a whole-life insurance policy worth $52,000 that directs the insurance company to pay the beneficiary $260,000 on Walter’s death. Walter pays the annual premiums and has the power to designate the beneficiary of the policy (it is currently his son, James). What value of the policy, if any, will be included in Walter’s gross estate upon his death?

Ashley owns a whole-life insurance policy worth $25,000 that directs the insurance company to pay the...

Ashley owns a whole-life insurance policy worth $25,000 that directs the insurance company to pay the beneficiary $500,000 on her death. Ashley pays the annual policy premiums and has the power to designate the beneficiary of the policy. What value of the policy, if any, would be included in Ashley's estate upon her death?

Edible Chemicals Corporation owns a $2 million whole life insurance policy on the life of its...

Edible Chemicals Corporation owns a $2 million whole life insurance policy on the life of its CEO, naming Edible Chemicals as beneficiary. The annual premiums are $72,000 and are payable at the beginning of each year. The cash surrender value of the policy was $22,000 at the beginning of 2018. 1. & 2. Prepare the appropriate 2018 journal entries to record insurance expense and the increase in the investment assuming the cash surrender value of the policy increased according to...

Concerning the settlement options in a whole life insurance policy, is the policyowner required to select...

Concerning the settlement options in a whole life insurance policy, is the policyowner required to select a settlement option when applying for insurance?

Investment B is represented by the cash value of a whole life insurance policy. Returns on...

Investment B is represented by the cash value of a whole life insurance policy. Returns on this Investment for the past 6 years are detailed in the table below, and Carlo expects the returns of the next 6 years to be the same as the last 6 years. Year Return 1 +4.9% 2 +5.0% 3 +4.6% 4 +5.1% 5 +4.9% 6 +4.8% 9. Taking only the beginning and ending balances of the investment into account in order to smooth the...

Question 6 In 2017, Lori assigned a paid-up whole life insurance policy to an Irrevocable Life...

Question 6 In 2017, Lori assigned a paid-up whole life insurance policy to an Irrevocable Life Insurance Trust (ILIT) for the benefit of her three children. The ILIT contained a Crummey provision for the benefit of each child. At the time of the transfer, the whole life insurance policy was valued at $200,000, and since Lori had not made any other taxable gifts during her lifetime, she did not owe any gift tax. Lori died in 2018, and the face...

Edie died last month owning a whole life insurance policy on her husband Rob’s life. The...

Edie died last month owning a whole life insurance policy on her husband Rob’s life. The death benefit amount was $500,000 and the insurance company valued the policy at $80,000. Edie was the beneficiary of the policy and her son Manny was the contingent owner. What amount is included in Edie’s estate? Is the policy part of Edie’s probate estate? Explain your answers.

Michael Glock was the policyowner-insured of a $50,000 participating whole life insurance policy with a $50,000...

Michael Glock was the policyowner-insured of a $50,000 participating whole life insurance policy with a $50,000 accidental death benefit (ADB) rider. Mr. Glock’s $750 annual premium was due on March 13, 2015. On March 24, Mr. Glock was killed in an automobile accident. At the time of his death he had not yet paid his overdue premium. Also at the time of his death, his policy had $3,400 in accumulated policy dividends, including interest, left on deposit with the insurer,...

Subjects