the maybe pay life insurance co. is trying to sell you an investment policy that will pay you and your heirs $40,000 per year forever. suppose a sales associate told you the policy costs $485,000. at what interest rate would this be a fair deal?

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21-10-2022
Business

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the maybe pay life insurance co. is trying to sell you an investment policy that will pay you and your heirs $40,000 per year forever. suppose a sales associate told you the policy costs $485,000. at what interest rate would this be a fair deal?

Answer :

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shivanijain4931 shivanijain4931 · Answer 1 · 2022-10-24T14:43:20-04:00

The maybe pay life insurance co. is trying to sell you an investment policy that will pay you and your heirs $40,000 per year forever. At 8.25% interest rate would this be a fair deal.

Interest rate (In case of Perpetuity)

Interest rate = [Annual payment / Total policy costs] x 100

= [$40,000 / $485,000] x 100

= 8.25% (Rounded to 2 decimal)

“Hence, the Interest rate will be 8.25%

life insurance is a agreement among an coverage coverage holder and an insurer or assurer, where the insurer promises to pay a chosen beneficiary a amount of money upon the demise of an insured man or woman. depending at the agreement, other occasions including terminal illness or essential infection also can trigger price.

Existence insurance is a contract among you and an coverage organisation . essentially, in trade in your top class payments, the insurance corporation can pay a lump sum referred to as a demise advantage to your beneficiaries after your death. Your beneficiaries can use the cash for some thing purpose they choose.

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