Tina Parker, a single mother, is 20 years old. She has called on you for an...
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Tina Parker, a single mother, is 20 years old. She has called on you for an insurance consultation. Her objective is to purchase life insurance protection for the next 10 years while her children are growing up. Tina tells you that she can afford about $550 per year for insurance premiums. You have suggested either a 10-year term policy or a whole life policy. (a) Using Table 19-1, rounded to the nearest thousand, how much insurance coverage (in $) can Tina purchase under each policy? Hint: Divide her annual premium allowance by the rate per $1,000 for each policy. 10-year term policy. $ whole life policy $ X (b) If she should die in the next 10 years, how much more (in $) will her children receive under the term insurance? $ X (c) Using Table 19-3, if she should live beyond the 10th year, determine her nonforfeiture options with the whole life policy. Option 1: Cash value (in $) $ X Option 2: Reduced Paid-up Insurance (in $) $ X Option 3: Extended Term (Enter your answer in years and an amount of days less than 365.) ✔ years, days TABLE 19-1 Annual Life Insurance Premiums (per $1,000 of Face Value) Age 18 $2.32 19 2.38 20 2.43 21 22 23 24 25 26 27 28 29 30 35 40 45 Male 2.49 2.55 2.62 2.69 2.77 2.84 2.90 2.98 3.07 3.14 5-Year Term 3.43 4.23 6.12 50 9.72 55 16.25 60 24.10 Term Insurance Female $ 1.90 1.96 2.07 2.15 2.22 2.30 2.37 2.45 2.51 2.58 2.64 2.70 2.78 2.92 3.90 5.18 8.73 12.82 19.43 10-Year Term Male $4.33 4.42 4.49 4.57 4.64 4.70 4.79 4.85 4.92 5.11 5.18 5.23 5.30 6.42 7.14 8.81 14.19 22.03 37.70 Female $4.01 4.12 4.20 4.29 4.36 4.42 4.47 4.51 4.60 4.69 4.77 4.84 4.93 5.35 6.24 7.40 9.11 13.17 24.82 Whole Life Male Female $13.22 $11.17 13.60 11.68 14.12 12.09 14.53 12.53 14.97 12.96 15.39 13.41 15.90 13.92 16.38 14.38 16.91 17.27 17.76 18.12 18.54 14.77 15.23 15.66 16.18 16.71 24.19 27.21 33.02 37.94 45.83 53.98 42.24 22.52 25.40 29.16 33.57 37.02 Permanent Insurance 20-Payment Life Male Female $23.14 $19.21 24.42 20.92 25.10 21.50 25.83 26.42 27.01 27.74 28.40 29.11 29.97 30.68 31.52 32.15 37.10 42.27 48.73 56.31 61.09 70.43 22.11 22.89 23.47 24.26 25.04 25.96 26.83 27.54 28.09 28.73 33.12 36.29 39.08 44.16 49.40 52.55 20-Year Endowment Male $33.22 33.68 34.42 34.90 35.27 35.70 36.49 37.02 37.67 38.23 38.96 39.42 40.19 43.67 48.20 51.11 58.49 71.28 79.15 Female $29.12 30.04 31.28 31.79 32.40 32.93 33.61 34.87 35.30 35.96 36.44 37.21 37.80 39.19 42.25 46.04 49.20 53.16 58.08 TABLE 19-3 Nonforfeiture Options (per $1,000 of Face Value Issued to a Woman at Age 20) 20-Payment Life Options 2 3 Extended Term End of Cash Year Value 357 10 15 20 $ 11 32 54 98 157 262 Whole Life Options 2 Reduced Paid-Up Insurance $ 25 64 99 186 314 491 3 Extended Term Years 2 9 13 17 21 25 1 Cash Days Value 17 23 142 54 218 77 $ 29 73 101 191 322 505 Reduced Paid-Up Insurance $ 90 212 367 496 789 1,000 Cash Years Days Value 14 23 20-Year Endowment Options 3 Extended Term 4 217 $ 39 86 91 152 186 206 324 142 647 1,000 30 34 1 -Life- 2 Reduced Paid-Up Insurance $ 97 233 381 512 794 1,000 Years 7 19 26 32 37 -Life- Days 132 204 310 117 350 Tina Parker, a single mother, is 20 years old. She has called on you for an insurance consultation. Her objective is to purchase life insurance protection for the next 10 years while her children are growing up. Tina tells you that she can afford about $550 per year for insurance premiums. You have suggested either a 10-year term policy or a whole life policy. (a) Using Table 19-1, rounded to the nearest thousand, how much insurance coverage (in $) can Tina purchase under each policy? Hint: Divide her annual premium allowance by the rate per $1,000 for each policy. 10-year term policy. $ whole life policy $ X (b) If she should die in the next 10 years, how much more (in $) will her children receive under the term insurance? $ X (c) Using Table 19-3, if she should live beyond the 10th year, determine her nonforfeiture options with the whole life policy. Option 1: Cash value (in $) $ X Option 2: Reduced Paid-up Insurance (in $) $ X Option 3: Extended Term (Enter your answer in years and an amount of days less than 365.) ✔ years, days TABLE 19-1 Annual Life Insurance Premiums (per $1,000 of Face Value) Age 18 $2.32 19 2.38 20 2.43 21 22 23 24 25 26 27 28 29 30 35 40 45 Male 2.49 2.55 2.62 2.69 2.77 2.84 2.90 2.98 3.07 3.14 5-Year Term 3.43 4.23 6.12 50 9.72 55 16.25 60 24.10 Term Insurance Female $ 1.90 1.96 2.07 2.15 2.22 2.30 2.37 2.45 2.51 2.58 2.64 2.70 2.78 2.92 3.90 5.18 8.73 12.82 19.43 10-Year Term Male $4.33 4.42 4.49 4.57 4.64 4.70 4.79 4.85 4.92 5.11 5.18 5.23 5.30 6.42 7.14 8.81 14.19 22.03 37.70 Female $4.01 4.12 4.20 4.29 4.36 4.42 4.47 4.51 4.60 4.69 4.77 4.84 4.93 5.35 6.24 7.40 9.11 13.17 24.82 Whole Life Male Female $13.22 $11.17 13.60 11.68 14.12 12.09 14.53 12.53 14.97 12.96 15.39 13.41 15.90 13.92 16.38 14.38 16.91 17.27 17.76 18.12 18.54 14.77 15.23 15.66 16.18 16.71 24.19 27.21 33.02 37.94 45.83 53.98 42.24 22.52 25.40 29.16 33.57 37.02 Permanent Insurance 20-Payment Life Male Female $23.14 $19.21 24.42 20.92 25.10 21.50 25.83 26.42 27.01 27.74 28.40 29.11 29.97 30.68 31.52 32.15 37.10 42.27 48.73 56.31 61.09 70.43 22.11 22.89 23.47 24.26 25.04 25.96 26.83 27.54 28.09 28.73 33.12 36.29 39.08 44.16 49.40 52.55 20-Year Endowment Male $33.22 33.68 34.42 34.90 35.27 35.70 36.49 37.02 37.67 38.23 38.96 39.42 40.19 43.67 48.20 51.11 58.49 71.28 79.15 Female $29.12 30.04 31.28 31.79 32.40 32.93 33.61 34.87 35.30 35.96 36.44 37.21 37.80 39.19 42.25 46.04 49.20 53.16 58.08 TABLE 19-3 Nonforfeiture Options (per $1,000 of Face Value Issued to a Woman at Age 20) 20-Payment Life Options 2 3 Extended Term End of Cash Year Value 357 10 15 20 $ 11 32 54 98 157 262 Whole Life Options 2 Reduced Paid-Up Insurance $ 25 64 99 186 314 491 3 Extended Term Years 2 9 13 17 21 25 1 Cash Days Value 17 23 142 54 218 77 $ 29 73 101 191 322 505 Reduced Paid-Up Insurance $ 90 212 367 496 789 1,000 Cash Years Days Value 14 23 20-Year Endowment Options 3 Extended Term 4 217 $ 39 86 91 152 186 206 324 142 647 1,000 30 34 1 -Life- 2 Reduced Paid-Up Insurance $ 97 233 381 512 794 1,000 Years 7 19 26 32 37 -Life- Days 132 204 310 117 350
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Canadian Income Taxation Planning And Decision Making
ISBN: 9781259094330
17th Edition 2014-2015 Version
Authors: Joan Kitunen, William Buckwold
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