13
QuizMultiple Choice

Life Insurance

Question 13 • Financial Math - MA2007

Sarah, age 29, makes $45,000 a year and wants to buy a 15-year term policy that would replace seven years of her salary. The annual premium rate (per $1000 of face value) for her age group is $1.46. What is Sarah’s premium, to the nearest dollar?

Answer
A
$460
B
$215
C
$66
D
$986

Explanation

Sarah wants coverage equal to seven years of her $45,000 salary: 7 × $45,000 = $315,000. That is 315 units of $1,000, so the annual premium is 315 × $1.46 = $459.90, which rounds to $460. The correct choice is $460.

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