First, we need to determine the monthly premium for Max's current $75,000 policy as a smoker:
Age range 31 to 40 for smokers:
$9.00 per $25,000 for males $9.00 * 3 = $27.00 per month for smokers
Since Max's coverage is $75,000, the monthly premium for him as a smoker is:
$27.00 * 3 = $81.00 per month
Next, we need to determine the monthly premium for Max if he were a non-smoker:
Age range 31 to 40 for non-smokers:
$5.50 per $25,000 for males $5.50 * 3 = $16.50 per month for non-smokers
Since Max's coverage is $75,000, the monthly premium for him as a non-smoker is:
$16.50 * 3 = $49.50 per month
Therefore, the difference in monthly premiums if Max quit smoking would be:
$81.00 - $49.50 = $31.50
To calculate how much Max would save in a year by quitting smoking, we multiply the monthly savings by 12:
$31.50 * 12 = $378.00 per year
Therefore, Max would save $378.00 in a year on a $75,000 policy if he quit smoking compared to if he continued smoking.
The sample life insurance premium table illustrates the monthly premium for every $25,000 of coverage.
Age Nonsmoker Male Nonsmoker Female Smoker Male Smoker Female
Under 24 $3.00 $2.50 $4.50 $4.00
24 to 30 $4.00 $3.50 $6.15 $5.25
31 to 40 $5.50 $4.40 $9.00 $6.50
41 to 50 $7.50 $6.75 $13.00 $12.00
Max is 33 and smokes. How much would he save next year on a $75,000 policy if he quit smoking compared to if he continued smoking? Show your work or explain how you got your answer.
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