Answered

Westonci.ca offers quick and accurate answers to your questions. Join our community and get the insights you need today. Discover in-depth answers to your questions from a wide network of experts on our user-friendly Q&A platform. Explore comprehensive solutions to your questions from a wide range of professionals on our user-friendly platform.

Alphonso is considering purchasing a \[tex]$200,000 life insurance policy. Alphonso is a 32-year-old single male with perfect health and no children.

Which life insurance policy is best for Alphonso?

\begin{tabular}{|c|c|c|c|c|}
\hline
& Policy A & Policy B & Policy C & Policy D \\
\hline
Term or Whole & Term & Term & Whole & Whole \\
\hline
Death Benefit & \$[/tex]200,000 & \[tex]$200,000 & \$[/tex]200,000 & \[tex]$200,000 \\
\hline
Protection Period & 15 years & 30 years & Life & Life \\
\hline
Cost per Year & \$[/tex]495 & \[tex]$500 & \$[/tex]6900 & \$7100 \\
\hline
Proceeds Paid to Beneficiaries & Yes & Yes & Yes & Yes \\
\hline
Convertible Term & No & Yes & No & Yes \\
\hline
Dividends & No & Yes & Yes & Yes \\
\hline
\end{tabular}

A. Policy C
B. Policy A
C. Policy D
D. Policy B

Sagot :

GinnyAnswer
To determine the best life insurance policy for Alphonso, we need to compare the different aspects of each option, particularly focusing on the cost-effectiveness and the protection period.

### Breakdown of Policies

Policy A:
- Type: Term
- Death Benefit: [tex]$200,000 - Protection Period: 15 years - Cost per Year: $[/tex]495

Policy B:
- Type: Term
- Death Benefit: [tex]$200,000 - Protection Period: 30 years - Cost per Year: $[/tex]500

Policy C:
- Type: Whole
- Death Benefit: [tex]$200,000 - Protection Period: Life - Cost per Year: $[/tex]6900

Policy D:
- Type: Whole
- Death Benefit: [tex]$200,000 - Protection Period: Life - Cost per Year: $[/tex]7100

### Step-by-Step Calculation and Comparison

1. Calculate the Cost Effectiveness:
- For Policy A, the cost per year of protection is calculated by dividing the annual cost by the number of years of protection:
[tex]\[ \text{Cost effectiveness of Policy A} = \frac{\$495}{15 \text{ years}} = \$33 \text{ per year of protection} \][/tex]
- For Policy B, the cost per year of protection is:
[tex]\[ \text{Cost effectiveness of Policy B} = \frac{\$500}{30 \text{ years}} = 16.\overline{6} \text{ per year of protection} \][/tex]

2. Comparing Cost-Effectiveness:
- Policy A has a cost effectiveness of [tex]$33 per year of protection. - Policy B has a cost effectiveness of approximately $[/tex]16.67 per year of protection.

Based on these calculations, Policy B is more cost-effective than Policy A.

3. Comparison with Whole Life Policies:
- Policy C and Policy D offer lifetime protection, but they cost significantly more annually ([tex]$6900 and $[/tex]7100, respectively).
- Since we are looking for minimization of cost while ensuring significant protection, Term policies offer a better balance of cost to coverage compared to Whole life policies.

4. Final Decision:
- Both Policy C and Policy D are more expensive annually compared to Policy A and Policy B.
- Between the term policies, Policy B provides a lower cost per year of protection and also offers twice the term length (30 years) compared to Policy A (15 years).

In conclusion, considering cost-effectiveness and duration of protection, Policy B is the best option for Alphonso. It has the lowest cost-per-year of protection and offers protection for a longer period of time.

So, the best life insurance policy for Alphonso is Policy B.
Thanks for stopping by. We strive to provide the best answers for all your questions. See you again soon. Thank you for choosing our platform. We're dedicated to providing the best answers for all your questions. Visit us again. Get the answers you need at Westonci.ca. Stay informed by returning for our latest expert advice.