Question

Maria, age 28, wants to pay no more than $300 a year in life insurance. What is the face value of the largest 20-year term policy she can buy without spending more than $300 annually?
Annual life insurance premium (per 1,000 dollars of face value) for age 28. A 10-year term for female is 1.28, 15 year term for female is 1.54, 20 year term for female is 1.89, and whole life for female is 9.46.
a.
$234,000
b.
$158,000
c.
$11,000
d.
$567,000

Answer 1

Premium per $1,000 for a 20-year term = $1.89.
Thousands of dollars of coverage she can buy = 300 / 1.89 ≈ 158.73 (thousand).
So the largest available face value (from choices) is $158,000.

Answer: b. $158,000