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Moderate

Choosing Life Insurance

GMAT-S1HXNT

Life Insurance Policy A Rate Guidelines

The policies below are based on monthly rates per $1,000 of coverage.

Age Member Rate (\$99,000 or less) Non-Smoker Rate (\$100,000 or more) Smoker Rate (\$100,000 or more)
0 to 24 \$0.05 \$0.04 \$0.05
25 to 29 \$0.06 \$0.04 \$0.06
30 to 34 \$0.08 \$0.04 \$0.08
35 to 39 \$0.09 \$0.05 \$0.09
40 to 44 \$0.14 \$0.07 \$0.14
45 to 49 \$0.19 \$0.10 \$0.19
50 to 54 \$0.39 \$0.15 \$0.39
55 to 59 \$0.60 \$0.23 \$0.60
60 to 64 \$1.25 \$0.37 \$1.25
65 to 69 \$1.85 \$0.64 \$1.85
70 to 74 \$2.80 \$1.14 \$2.80
75 to 79 \$6.20 \$3.10 \$6.20
80 to 84 \$8.60 \$5.48 \$8.60
85+ \$8.60 \$8.60 \$8.60

Consider each of the following statements. Does the information in the three sources support the inference as stated?

Yes

No

Yes

No

A male, nonsmoker, “preferred” policyholder who is 44 years old and wants a 200,000 life insurance policy will find the lowest premiums from Policy C.

Yes

No

A female, smoker, “select” policyholder who has a 100,000 life insurance policy will find the biggest increase in monthly premiums between age 59 and age 60 from Policy B.

Yes

No

The difference between smoking and nonsmoking rates for males at age 39 for a 200,000 life insurance policy is greater for Policy C than for Policy B.