Author Question: Beth purchased a 50,000 nonparticipating whole life insurance policy. The annual premium was 1,278. ... (Read 332 times)

ghost! · **on:** Jul 11, 2018

Beth purchased a 50,000 nonparticipating whole life insurance policy. The annual premium was 1,278. The cash value of the policy after 10 years will be 13,740.

The future value of 1 deposited at the start of the year for 10 years, assuming 5 percent interest, is 13.207. If the premiums were invested at 5 percent interest for 10 years, the premiums would grow to 16,878.55. Assuming 5 percent interest, what is the surrender cost of this policy, per thousand per year, over the first 10 years the policy is in force?
A) 4.48
B) 4.75
C) 4.92
D) 5.16

Question 2

Purposes of life insurance policy reserves include which of the following? I. Legal test of the insurer's solvency II. Formal recognition of the obligation to pay future claims

A) I only
B) II only
C) both I and II
D) neither I nor II