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Premium rates are often referred to as premium per fixed face value. Jade's annual premium for a 10-year policy of $200,000 is $1,202.
How to calculate the total annual premium for $x?
When it's given that the annual premium is $p per $y face value, then we can calculate the annual premium for $1 face value and then use it to calculate the annual premium for $x. Therefore using proportions, we can write,
$y face value : $p annual premium
[tex]\text{\$1 face value} : \$\dfrac{P}{y}\ \rm annual\ premium[/tex]
[tex]\text{\$x face value} : \$\dfrac{P\times x}{y}\ \rm annual\ premium[/tex]
In the given case, from the tables, we see that for age 34, and 10-year life insurance for the female gender, there is an annual premium of 6.01 per $1000 face value.
Therefore, we will get the value of p = 6.01, and y = 1000.
As mentioned that Jade wants to buy Life insurance for $200,000, therefore, x = $200,000
Putting it in the above-derived formula, we get:
[tex]\text{\$x face value} : \$\dfrac{P\times x}{y}\ \rm annual\ premium[/tex]
[tex]\text{\$200,000 face value} : \$\dfrac{6.01\times 200,000}{1,000}\ \rm annual\ premium = \$1,202\ \rm annual\ premium[/tex]
Hence, Jade's annual premium for a 10-year policy of $200,000 is $1,202.
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