BUSN 380 BUSN380 Week 6 Problem Set 6 Solution

BUSN 380 BUSN380 Week 6 Problem Set 6 Solution


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BUSN 380 Week 6 Problem Set 6

1. For each of the following situations, what amount would the insurance company pay?


2. Beverly and Kyle Nelson currently insure their cars with separate companies paying $650 and $575 a year. If they insure both cars with the same company, they would save 10 percent on the annual premiums. What would be the future value of the annual savings over ten years based on an annual interest rate of 6 percent?


4.Sarah’s comprehensive major medical health insurance plan at work has a deductible of $750. The policy pays 85 percent of any amount above the deductible. While on a hiking trip, she contracted a rare bacterial disease. Her medical costs for treatment, including medicines, tests, and a six-day hospital stay, totaled $8,893. A friend told her that she would have paid less if she had a policy with a stop-loss feature that capped her out-of-pocket expenses at $3,000. Was her friend correct? Show your computations. Then determine which policy would have cost Sarah less and by how much.


6. You are the wage earner in a “typical family,” with $40,000 gross annual income. Use the easy method to determine how much life insurance you should carry.

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