Question

Sherita, age 37, wants to pay no more than $750 a year in life insurance. If the annual life insurance premium rate (per $1000 of face value) is $3.96, what is the largest 15-year term policy she can buy without spending more than $750 annually?
a.
$189,000
b.
$109,890
c.
$203,252
d.
$276,750

Answer 1

Rate is $3.96 per $1,000, so number of thousands she can buy = 750 / 3.96 ≈ 189.3939.
Face amount = 189.3939 × $1,000 ≈ $189,393.94.

The largest option not exceeding that is $189,000 — answer: a.