Parker Manufacturing buys life insurance policies for their top three employees. They purchase $225,000 term policies for each employee, quoted at $3.37 per $1,000 for one year. How much will the monthly premium be for all three employees?

Question

Quizplus · Accepted Answer

The total value of all three policies is:

$225,000 x 3 = $675,000

To determine the monthly premium, we need to calculate the annual premium first:

$225,000 ÷ 1,000 = 225
225 x $3.37 = $758.25
$758.25 x 3 = $2,274.75

Then, we divide the annual premium by 12 to get the monthly premium:

$2,274.75 ÷ 12 = $189.56

Therefore, the monthly premium for all three employees is $189.56, which is option B.

Parker Manufacturing Buys Life Insurance Policies for Their Top Three