The Following Table Gives Annual Life Insurance Premiums Per $\$ 1,000$ Of Face Value. Use The Table To Determine The Face Value Of A 5-year Term Insurance Policy On A 23-year-old Female Given That The Annual Premium For The Insurance
**The following table gives annual life insurance premiums per $1,000 of face value. Use the table to determine the face value of a 5-year term insurance policy on a 23-year-old female given that the annual premium for the insurance**
Understanding Life Insurance Premiums
Life insurance premiums are calculated based on various factors, including the policyholder's age, health, and the face value of the policy. The table provided gives us a glimpse into how premiums are determined for a 5-year term insurance policy.
Table: Annual Life Insurance Premiums per $1,000 of Face Value
| Age | 5-Year Term Insurance Premium per $1,000 of Face Value |
|---|---|
| 20 | $6.50 |
| 21 | $7.00 |
| 22 | $7.50 |
| 23 | $8.00 |
| 24 | $8.50 |
| 25 | $9.00 |
Q&A: Determining the Face Value of a 5-Year Term Insurance Policy
Q: What is the face value of a 5-year term insurance policy on a 23-year-old female given that the annual premium for the insurance is $40?
A: To determine the face value of the policy, we need to divide the annual premium by the premium per $1,000 of face value. From the table, we see that the premium per $1,000 of face value for a 23-year-old is $8.00. Therefore, we can calculate the face value as follows:
Face Value = Annual Premium / Premium per $1,000 of Face Value Face Value = $40 / $8.00 Face Value = $5,000
Q: What is the annual premium for a 5-year term insurance policy on a 25-year-old male with a face value of $10,000?
A: To determine the annual premium, we need to multiply the face value by the premium per $1,000 of face value. From the table, we see that the premium per $1,000 of face value for a 25-year-old is $9.00. Therefore, we can calculate the annual premium as follows:
Annual Premium = Face Value x Premium per $1,000 of Face Value Annual Premium = $10,000 x $9.00 Annual Premium = $90,000
Q: How does the age of the policyholder affect the life insurance premium?
A: The age of the policyholder is a significant factor in determining the life insurance premium. As we can see from the table, the premium per $1,000 of face value increases with age. This is because older policyholders are considered to be at a higher risk of death, and therefore, the insurance company charges a higher premium to account for this risk.
Q: What is the difference between a 5-year term insurance policy and a whole life insurance policy?
A: A 5-year term insurance policy provides coverage for a specified period of time (in this case, 5 years), and the premium is typically lower than that of a whole life insurance policy. A whole life insurance policy, on the other hand, provides coverage for the policyholder's entire lifetime, and the premium is typically higher.
Q: Can I change the face value of my life insurance policy after it has been issued?
A: It depends on the type of policy you have. Some policies may allow you to change the face value, while others may not. It's best to check with your insurance company to see if this is an option for you.
Q: How do I choose the right face value for my life insurance policy?
A: The right face value for your life insurance policy will depend on your individual circumstances and needs. You may want to consider factors such as your income, expenses, debts, and financial goals when determining the face value of your policy.
Conclusion
In conclusion, determining the face value of a 5-year term insurance policy requires understanding the premium per $1,000 of face value and the annual premium. By using the table provided, we can calculate the face value of a policy based on the policyholder's age and the annual premium. It's essential to consider factors such as the policyholder's age, health, and financial goals when determining the face value of a life insurance policy.