Max is in the 24 to 30 age bracket, so for a $25,000 policy, his monthly premium as a smoker would be $6.15.
To calculate his monthly premium for a $75,000 policy, we need to multiply $6.15 by 3 (since he is getting coverage for 3 times the amount).
$6.15 x 3 = $18.45
So Max's monthly premium for a $75,000 policy as a smoker would be $18.45.
If Max quit smoking, he would be charged the nonsmoker rate. For a $75,000 policy in the 24 to 30 age bracket, the monthly premium for a nonsmoker is $3.50.
Again, we need to multiply by 3 to get Max's monthly premium for a $75,000 policy:
$3.50 x 3 = $10.50
So Max's monthly premium for a $75,000 policy as a nonsmoker would be $10.50.
To calculate how much Max would save in a year, we need to subtract the smoker premium from the nonsmoker premium and then multiply by 12 (for the 12 months in a year):
($18.45 - $10.50) x 12 = $93.60
So Max would save $93.60 per year if he quit smoking and got a $75,000 life insurance policy.
Use the table to answer the question.
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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