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?

Question

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

To find the face value of the largest 20-year term policy Maria can buy without spending more than $300 annually, we need to divide $300 by the annual life insurance premium per $1,000 of face value for a 20-year term for a female. The premium is $1.89 per $1,000.

Dividing $300 by $1.89 gives us:

$300 / $1.89 = 158.73

So, the largest face value Maria can buy is approximately $158,000.

Therefore, the correct answer is option b. $158,000.