Cash value-assume payments are paid ahead of coverage

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Reference no: EM131906476

A cash value life insurance policy with a face value of $100,000 was prepared for John. John was only 30 at the time of purchase. The insurance company will pay the $100,000 death benefit at 95 if John is living. Assume payments are paid ahead of coverage.

a. At what annual premium will the insurance company make 0 profit assuming a 4% annual return.

b. At what monthly premium will the insurance company make 0 profit assuming a 4% return on premiums?

Hint-Insurance Face Value = FV, Interest = 4 annual or 4/12 monthly, premiums=payments, n= number of years (annual) or monthly periods (years x 12).

Reference no: EM131906476

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