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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)

use this to answer the question:
$/$ = units of coverage
Use the premium amounts for the 34-year-old male:
Smoker: Row 3, Column 3 shows $ per $ so $() = $ per month.
$() = $ per year
Non-Smoker: Row 3, Column 1 shows $ per $ so $() = $ per month.
$() = $ per year

1 answer

To determine how much Chloe would save in a year on a $100,000 policy if she quit smoking, we will follow these steps:

  1. Find the monthly premium for a smoking female:

    • According to the table, for females ages 24 to 30 who smoke, the monthly premium per $25,000 of coverage is $5.25. Since Chloe is under 30, we will use this amount.
    • For a $100,000 policy, which is equal to 4 units of $25,000: \[ \text{Monthly premium for smoker} = 4 \times 5.25 = 21.00 \]

  2. Calculate the yearly premium for a smoking female:

    • To find the yearly premium, we multiply the monthly premium by 12: \[ \text{Yearly premium for smoker} = 21.00 \times 12 = 252.00 \]

  3. Find the monthly premium for a non-smoking female:

    • According to the table, for non-smoking females ages 24 to 30, the monthly premium per $25,000 of coverage is $3.50.
    • For a $100,000 policy, which also equals 4 units of $25,000: \[ \text{Monthly premium for non-smoker} = 4 \times 3.50 = 14.00 \]

  4. Calculate the yearly premium for a non-smoking female:

    • To find the yearly premium, we multiply the monthly premium by 12: \[ \text{Yearly premium for non-smoker} = 14.00 \times 12 = 168.00 \]

  5. Calculate the savings from quitting smoking:

    • Now, to find how much Chloe would save by quitting smoking, we subtract the non-smoker premium from the smoker premium: \[ \text{Savings} = 252.00 - 168.00 = 84.00 \]

Therefore, if Chloe quit smoking, she would save $84.00 per year on her $100,000 life insurance policy.