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Sally Said:

Can anyone give me a good estimate for the monthly premium on a decent life insurance policy for 1 employee?

We Answered:

Nope, sorry. One employee is not a group - so it will be an individually rated policy, based on the age, health, and policy limit.

Workers comp is based on the type of work, and the payroll. It's very straight forward, but you HAVE to know the type of work, and how much they're being paid. One clerical type person - sitting at a desk all day typing, will cost about $250 a year. One roofer can cost about $15,000 a year. So it matters.

Armando Said:

I have a life insurance policy with a cash-in value of $30K. I have estimated that around $6000 has been paid

We Answered:

That's interesting. You only paid a total of $6000 in premiums and accumulated $30,000 in cash value? Are you sure you only paid a total of $6000 in premiums? That mean you would of paid $240/year in premiums and getting at least a 10%-12% rate of return on the cash value. I just find that very odd because I seen so many life policies where its the other way around. If this is the case, your life policy is probably now a modified endowment contract. That means your beneficiary will pay income tax on death benefit, you will pay 10% penalty on withdrawals of cash value, and you will pay income tax every year on the the cash value. Hopefully, your life policy has not turned into a modified endowment.

Anyway, you can't just take out a portion of the $6000 and leave the rest in the life policy. There are three things you can do:
1) You can borrow $6000 and pay loan interest on it. You will reduce the death benefit if you die and didn't pay the loan back.
2) You can surrender the policy and pay surrender charges on it and then pay income tax on it.
3) You can do a 1035 exchange, which moves the cash value into a variable annuity. You pay surrender charges, but no income tax.

Hope that helps.

Brad Said:

Can anyone help me with this accounting assignment?

We Answered:

If you would like to post or email me the answers you came up with to show you made an attempt, I would be happy to look them over and correct them for you.

Karen Said:

Statistics help please? I have tried everything i just dont understand.?

We Answered:

Part (a) is a hypothesis testing for claim regarding the mean. I'm going to assume that you have some knowledge of hypothesis testing. First identify the original claim which is Mu>77. The negation of the claim is Mu less than or equal to 77. Since original claim does not contain the equality, this will be the alternative hypothesis. So you have

H0: Mu = 77
Ha: Mu > 77 (this is the original claim)

Now we need to find the test statistic by using the formula t = (x bar - mu) / (s/sqrt(n)). We use Student t distribution with df=49 because sigma (standard deviation of the population) is unknown. But to do that, we need to find x bar and s based on the provided sample data. (s is the standard deviation of the sample)

Using calculator (or by manually which will be painful), x bar = 78.6 and s = 4.3635. Sample size (n) is 20 and we're assuming that mu is 77. Plug in these numbers into the formula and you get t = 1.598.

Since Ha: mu > 77, this will be right tailed test, that is critical region lies on the right side of the distribution.

Now you have choice. You can use 1)traditional method, 2)P-value method, or 3) Confidence Interval.

1) Traditional method.
Find the critical value by using the significance level (alpha). Since significance level is not given, you can assume that it's 0.05. The corresponding t value (critical score) is 1.729. Notice that your test statistic was t = 1.598, so the test statistic is not inside the critical region (Since it's right tailed, any value greater than our critical score = 1.729 will fall in the critical region). Thus we fail to reject the null hypothesis.

2) P-value method.
Find the area to the right of the test statistic. You can use the table or calculator.
P = 0.0632. Since P value is greater than the significance level (0.05), we fail to reject the null hypothesis.

3) Confidence interval.
Contruct the confidence interval. The formula is x bar plus or minus E (margin of error) where E is t* times s/sqrt(n). For this, you'll be using 90% confidence level since this is one tailed and significance level is 0.05.
The interval turns out to be (76.869, 80.331). Since our assumed mu = 77 is inside the interval, we fail to reject the null hypothesis.

Notice that no matter which method you use, you get the same conclusion (don't use CI for testing claim about proportion though...). Since we failed to reject the null hypothesis, we don't have enough evidence to support the claim that mean life expectancy of policyholders has increased.

Of course, if you know how to use your graphing calculator, TI-83 for example, you don't have to go through with this as it calculates basically everything for you.

Part (b) is minimum sample size question. Taking the formula for E (margin of error: E = t* times s/sqrt(n)) and solving for n we get n = t^2 s^2 / E^2. Since the confidence level is 95% and df = 49, t* = 2.0096. We know s from the data and sample size (n) is 20. Plugging them in, n= 76.8934. We always round the number up if there's decimal, so n= 77. They need to have randomly selected 77 records.


Whew~

Connie Said:

American Amicable Life/Horizon Life insurance Questions..?

We Answered:

Without being able to see your total financial picture, I would lean towards you are thinking pretty good.

One question tho. Is your husband covered by SGLI and FSGLI for 50k each or is he covered for a total of 50k?

This seems way under protected. Do you own your own house? How about your debt? Do you have alot? Are you working right now?

I would ask you for an appointment to take a look at all of your finances. Without doing that, I would not be able to reccomend a course of action that would be to your benefit. I would feel as if I were blind.

I do feel you should consider cutting your losses with the insurance that you have. It appears, from what I see here, that it is a waste of money. Just look at the return you have for 3.5 years- $250. That is a -15%!!! Seems like you have the beginnings of a good plan.Get a complete financial analysis done for you and your husband. You'll be better off in the long run.

Sounds like you have thought this out fairly carefully. From what I see, you have a good plan going. Are both SGLI and FSGLI whole life policies? Would you consider swithching to term to help eliminate your debt and increase your savings?

Jessie Said:

i need stat help!?

We Answered:

Alright, I think I might have figured it out. You kind of have to make up your own figures.
Edit:
Well, it appears that the company could never be profitable if you think about it. Say you base it on 1000 women over age 65.
Women over age 65 who end up using the policy
1000*.026= 26 women over age 65 who would collect on the $100,000 life insurance.
This would end up costing the company 2.6 Million Dollars.
$100,000*26 women who have passed away.
Even if 974 women did not die, the insurance company would only collect $506,480.
That is based on 974 (women over age 65 who did not die)*$520(the insurance premium).

So you can see that no matter if they have 100, 1000 or 1 million women over 65 paying the premium. They will be paying out too much on the women that pass away (the 2.6%) to ever be profitable. They would need to charge more for their insurance premium to be profitable.

Edward Said:

Insanely hard math problem, 10 points if correct!?

We Answered:

Let's say they sell x policies.

They take in 500 * x in premiums.
But 2.6% or 0.026 * x of the old ladies don't make it.
They have to pay out 10000 * 0.026 * x dollars in benefits.
That's 260 * x in total.

500 * x - 260 * x = 240 * x
So they expect to make 240 per policy.