Question

What is the difference in the annual life insurance premiums paid by a 35-year-old smoker and a 35-year-old non-smoker, if they both take out a $100,000 policy for a 20-year term?

Age Smoker Age Non-Smoker 10 year 20 year
20 25 2.55 3.60
25 30 3.12 5.74
30 35 3.80 7.85
35 40 4.25 9.36

Answer 1

Answer:

The difference in the annual life insurance premiums paid by 35 years old smoker and non smoker is $151

Explanation:

According to the information provided in the question,

For a 20 year term plan, annual premium rate is

35 year old smoker = 9.36

35 year old non-smoker = 7.85

Assuming annual premium per $1000 and for a policy of $100,000

35 year old smoker= $(9.36/1000)*100,000=9.36*100=936$

35 year old non-smoker=$(7.85/1000)*100,000=7.85*100=785$

Therefore the difference between the smoker and non-smoker is

Difference=$936-785=151$