Question

The sample life insurance premium table illustrates the monthly premium for every $25,000 of coverage.
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.

Answer 1

I don’t have the premium table you mentioned. Can you post the monthly premium amounts from the table for a 25-year-old smoker and for a 25-year-old nonsmoker (these are given per $25,000 of coverage)?

Method (so you can check once you give the numbers):
- $100,000 is four $25,000 units, so multiply the per-$25,000 monthly premium by 4 to get the monthly premium for $100,000.
- Monthly savings if she quits = 4 × (monthly smoker rate per $25,000 − monthly nonsmoker rate per $25,000).
- Annual savings = 12 × monthly savings.

Example (illustration only): if the table showed $12/month per $25,000 for a smoker and $6/month per $25,000 for a nonsmoker,
- monthly savings = 4 × (12 − 6) = 4 × 6 = $24,
- annual savings = 12 × 24 = $288.

Give the two table numbers and I’ll compute the exact saving.