Question

Question Use the table to answer the question. The sample life insurance premium table illustrates the monthly premium for every $25,000 of coverage. Age Nonsmoker Male Nonsmoker Female Smoker Male Smoker Female Under 24 $3.00 $2.50 $4.50 $4.00 24 to 30 $4.00 $3.50 $6.15 $5.25 31 to 40 $5.50 $4.40 $9.00 $6.50 41 to 50 $7.50 $6.75 $13.00 $12.00 Chloe is 25 and smokes. How much would she save a year on a $100,000 policy if she quit smoking? Show your work or explain how you got your answer. (4 points)

Answer 1

To determine how much Chloe would save a year on a $100,000 life insurance policy if she quit smoking, we need to find the monthly premiums for both her current smoking status and the nonsmoking status.

1. **Determine the premium while smoking:**
- Chloe is 25 years old and smokes, so we look at the "Smoker Female" column for the age 24 to 30 range:
- **Smoker Female Premium:** $5.25 for every $25,000 of coverage.
- Since her coverage is for $100,000, we divide the coverage amount by $25,000:
\[
\frac{100,000}{25,000} = 4
\]
- Therefore, she would pay:
\[
5.25 \times 4 = 21.00 \text{ (monthly premium while smoking)}
\]

2. **Determine the premium while nonsmoking:**
- Now we look at the "Nonsmoker Female" column for the age 24 to 30 range:
- **Nonsmoker Female Premium:** $3.50 for every $25,000 of coverage.
- Using the same calculation for coverage of $100,000:
\[
3.50 \times 4 = 14.00 \text{ (monthly premium while nonsmoking)}
\]

3. **Calculate the monthly savings:**
- To find her savings per month if she quits smoking, we simply subtract the nonsmoking premium from the smoking premium:
\[
21.00 - 14.00 = 7.00
\]
- Therefore, Chloe would save $7.00 per month.

4. **Calculate the annual savings:**
- To find out how much she would save in a year, we multiply the monthly savings by 12 (months in a year):
\[
7.00 \times 12 = 84.00
\]

Thus, Chloe would save **$84.00 per year** if she quit smoking.