angelo, age 40, is comparing the premium for a $125,000 whole life insurance policy he may take now and the…

angelo, age 40, is comparing the premium for a $125,000 whole life insurance policy he may take now and the premium for the same policy taken out at age 45. the annual life insurance premium (per $1000 of face value) for a 40 - year - old male is 22.60 and for a 45 - year - old male is 27.75. what would be the difference in total premium costs over 20 years for this policy at the two age levels?\na. $69,375\nb. $11,725\nc. $12,875\nd. $644\nplease select the best answer from the choices provided

angelo, age 40, is comparing the premium for a $125,000 whole life insurance policy he may take now and the premium for the same policy taken out at age 45. the annual life insurance premium (per $1000 of face value) for a 40 - year - old male is 22.60 and for a 45 - year - old male is 27.75. what would be the difference in total premium costs over 20 years for this policy at the two age levels?\na. $69,375\nb. $11,725\nc. $12,875\nd. $644\nplease select the best answer from the choices provided

Answer

Explanation:

Step1: Calculate the number of $1000 - units

The face - value of the policy is $125000$. The number of $1000 - units is $n=\frac{125000}{1000}=125$.

Step2: Calculate the annual premium difference

The annual premium per $1000$ for a 40 - year - old is $22.60$, and for a 45 - year - old is $27.75$. The annual premium difference per $1000$ is $27.75 - 22.60=5.15$. For the $125$ $1000 - units$, the annual premium difference is $125\times5.15 = 643.75$.

Step3: Calculate the 20 - year premium difference

Multiply the annual premium difference by 20. The 20 - year premium difference is $643.75\times20=12875$.

Answer:

C. $12,875$