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You have been considering buying whole life policy for P50 000.00. Such type of coverage...

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Finance

  1. You have been considering buying whole life policy for P50 000.00. Such type of coverage usually has an annual premium of P400.00. The coverage is participating, and based on the insurers history with similar policies. It is expected that the insurer will pay P250.00 per year as dividends for the first twenty (20) years. The cash value for each of the 20 years will be P200.00. Both dividends and cash value have not been adjusted for time value of money. For calculations involving the time value of money, 5 percent is the appropriate interest rate.

  1. What is the surrender cost per thousand per year? [6 marks]
  1. What is the net payment cost per thousand per year? [5 marks]
  2. Traditional net cost method [5 marks]

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