1. Business
  2. Economics
  3. a 21000 ordinary life insurance policy for a 23year old...

Question: a 21000 ordinary life insurance policy for a 23year old...

Question details

A $21,000 ordinary life insurance policy for a 23-year old female can be obtained for annual premiums of approximately $200. This type of policy (ordinary life) would pay a death benefit of $21,000 in exchange for the annual premium paid during the lifetime of the insured person. If the average life expectancy of a 23-year old female is 63 years, what interest rate establishes equivalence between cash outflows and inflows for this type of insurance policy? Assume all premiums are paid on a beginning-of-year basis and that the last premium is paid on the 62th birthday. The interest rate which establishes equivalence between cash outflows and cash inflows is year. (Round to three decimal places.) 1% per

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution