Grace's employer is now offering group-term life insurance. The company will provide each employee with $200,000 of group-term life insurance. It costs Grace's employer $700 to provide this amount of insurance to Grace each year. Assuming that Grace is 43 years old, use the table to determine the monthly premium that Grace must include in income as a result of receiving the group-term life benefit. Uniform Premiums for $1,000 of Group-Term Life Insurance Protection:

Question

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To find the monthly premium that Grace must include in income, we first need to determine the cost of $1,000 of group-term life insurance protection. We can find this in the table by locating Grace's age range (40-44) and the corresponding rate, which is $0.075 per $1,000 of coverage.

Next, we need to determine how much the employer-paid coverage of $200,000 is worth on a monthly basis. We can do this by dividing the annual cost of $700 by 12 months, which gives us $58.33 per month.

Finally, we can calculate the monthly premium that Grace must include in income by multiplying the monthly value of the coverage ($58.33) by the rate per $1,000 of coverage ($0.075) and multiplying that by the coverage amount ($200,000) divided by $1,000.

So the calculation is: ($58.33 x 0.075 x 200)/1,000 = $0.275 per month per $1,000 of coverage. Multiply this by 200 (for the $200,000 in coverage) and you get $55. Therefore, Grace must include $55 per month in income as a result of receiving the group-term life benefit.

The closest answer choice is B, which is $15.00 per month, but this is not the correct answer.

Grace's Employer Is Now Offering Group-Term Life Insurance