Angelo, age 40, is comparing the premium for a $125,000 whole life insurance policy he may take now and the premium for the same policy taken out at age 45. The Annual Life Insurance Premium (per $1000 of face value) for a 40-year-old male is 22.60 and for a 45-year-old male is 27.75. What would be the difference in total premium costs over 20 years for this policy at the two age levels?
The difference in the annual rate is $27.75 − $22.60 = $5.15 per $1,000 of coverage. A $125,000 policy has 125 units of $1,000, so the annual premium difference is $5.15 × 125 = $643.75. Over 20 years, the difference is $643.75 × 20 = $12,875, so the correct choice is $12,875.
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