Question

Lamar, age 43, wants to pay no more than $1,000 a year in life insurance. If the annual life insurance premium rate (per $1000 of face value) is $12.59, what is the largest whole life policy he can buy without spending more than $1,000 annually?
a.
$12,590
b.
$341,540
c.
$541,370
d.
$79,000

Answer 1

Premium buys $1000 / $12.59 ≈ 79.37 units of $1,000 face each, so the largest whole-$1,000 policy is 79 units = $79,000. Answer: d.