Question

Lamar, age 43, wants to pay no more than $1,000 a year in life insurance. If the annual life insurance premium rate (per $1000 of face value) is $12.59, what is the largest whole life policy he can buy without spending more than $1,000 annually? a. $12,590 b. $341,540 c. $541,370 d. $79,000

Answer 1

Answer:

The calculationr amount is 79.43 x 1000 = 79430.00  BUT

Lamar wants to pay less than $1000.00 a year so the ANSWER is 79.000.00

Step-by-step explanation:

Answer 2

The correct statement is that Lamar will be able to spend on his largest life insurance policy up to a limit of maximum of $79000. So, the correct option is D.

The calculation of this is done by applying basic mathematics principles by using the options given in the statements in the query quoted above. Calculation will be as given below.

• The calculation of largest life insurance policy will be done as,

• $\rm Maximum\ Insurance\ To\ Be\ Availed= \dfrac {Max\ Premium\ To\ Be\ Paid}{Premium\ per\ Each\ \ 1000} x\ 1000$

• Putting the values in the formula above we get,

• $\rm Maximum\ Insurance\ To\ Be\ Availed= \dfrac {1000}{12.59} x\ 1000$

• Solving further,

• $\rm Maximum\ Insurance\ To\ Be\ Availed= 79.4\ x\ 1000\\\\\rm Maximum\ Insurance\ To\ Be\ Availed= \ 79400$

• The amount roughly comes close to $79400 but as per the options given in the query the closest amount is $79,000.

Hence, the correct option is D that Lamar may get a maximum insurance cover of $79400 by paying a premium of $1000.

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