This assignment will familiarize you with the rating factors in term life insurance. I recommend this site only because you can get a quote without providing any personal identifying information.

1. Go to www.statefarm.com, select "Life", entering your state of residence. Click on "Start a Quote". Click "Yes" when it asks if you're seeking a quote for yourself. Just make it out.

2. Enter your sex, your date of birth, and "no" for tobacco (we'll use "yes" in a later quote). Also enter height/weight information. Please note that the quote engine requires you to be at least 20 years old. You may have to adjust your date of birth to make this happen.

3. For the first quote, enter "No" for Tobacco/Nicotine Use.

4. For the rating (health) class, select "Excellent".

5. Select $500,000 for the coverage amount

6. Click on "Get Quote"

1. Annual premium (you have to multiply the monthly premium by 12) for $500,000 20-year coverage for a non-smoker_____________

2. Change the coverage amount to $1,000,000. You can do this without changing anythingthe quote on the right includes a $1,000,000 20 year monthly price (again, you have to multiply by 12): The new annualpremium is ____________

3. Change the term to 10 years. How much is the annual premium for $1,000,000 in coverage? ___________

Restart the process. Fill out all the options as before, with $1,000,000 in coverage and 20 years for the term, but this time select "Current User" for Tobacco/Nicotine Use.

4. Annual premium for 20 year $1,000,000 coverage for a current tobacco user _______________

Restart the process once again. This time, we'll assume you are a non-smoker in the "Average" health class. Use 20 years for the term and $1,000,000 for the coverage.

5. Premium for $1,000,000 coverage (20-year term) for a non-smoker _______________

6. How much extra does it cost to change the level of coverage from $500,000 to $1,000,000? (Hint: #2- #1) ________________

7. How much extra (per year) does it cost to have a 20-year policy as opposed to a 10-year policy? (Hint: #2 - #3) ____________

8. How much extra (per year) will a smoker pay for 20-year-term and $1,000,000 in coverage? (Hint: #4 - #2) ___________

9. How much extra will someone in the "Average" category pay (per year) than someone in the "Excellent" category for 20-year term, $1,000,000 in coverage? (Hint: #5 - #2) ____________

10. Compare the monthly cost of $1,000,000 20-year term insurance (#2 divided by 12) to your choice of one of the following monthly expenses that you have: your cell phone bill, your cable TV bill, your utility bill, your monthly clothing budget, or your monthly expenses on entertainment (no judgments will be made--I'm just trying to relate the cost of term life insurance to something you normally spend money on each month). Is this more or less than what you expected, and why?

11. Does your answer to #10 match what you expected? Why/why not?

13. Which will result in the highest premium savings (given the assumptions we've made when getting quotes)--quitting smoking or being in the best rating class? (Hint: Compare #9 and #10) Is this what you expected? Why/why not?

Answer rating: 100% (QA)

1 The annual premium for 500000 20year coverage for a nonsmoker is 360 2 The new annual premium for ... View the full answer