To determine how much Max would save next year on a $75,000 life insurance policy if he quit smoking compared to if he continued smoking, we will first need to calculate the monthly premiums for both scenarios (smoker and non-smoker) based on the table provided.
1. Calculate the monthly premium as a smoker:
Max is 33 years old and smokes. According to the table:
- Smoker Male (age 31 to 40): $9.00 per $25,000 of coverage.
For a $75,000 policy, we need to see how many $25,000 segments are in $75,000:
- $75,000 / $25,000 = 3 segments.
Now, multiply the premium for smokers by the number of segments:
- Monthly Premium as a Smoker: \[ 3 \times 9.00 = 27.00 \text{ (monthly)} \]
2. Calculate the monthly premium as a non-smoker:
Now, let's calculate the monthly premium if Max quits smoking.
- Nonsmoker Male (age 31 to 40): $5.50 per $25,000 of coverage.
Using the same logic as above:
- Monthly Premium as a Nonsmoker: \[ 3 \times 5.50 = 16.50 \text{ (monthly)} \]
3. Calculate the yearly premiums for both scenarios:
To find out the total premiums for the year:
- Yearly Premium as a Smoker: \[ 27.00 \times 12 = 324.00 \]
- Yearly Premium as a Nonsmoker: \[ 16.50 \times 12 = 198.00 \]
4. Calculate the savings if Max quits smoking:
To find out how much Max would save if he quit smoking compared to continuing to smoke:
- Savings: \[ 324.00 - 198.00 = 126.00 \]
Conclusion:
If Max quits smoking, he would save $126.00 next year on a $75,000 life insurance policy.