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BUSN380 Week 6 TCO 4 Problem Set 6 - Home, Automobile, Health, &amp; Life Insurance

# BUSN380 Week 6 TCO 4 Problem Set 6 - Home, Automobile, Health, & Life Insurance

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Problem Set 6 1. For each of the following situations, what amount would the insurance company pay? a. Wind damage of \$835; the insured has \$500 deductible. b. Theft of a stereo system worth \$1,300; the insured has a \$250 deductible. c. Vandalism that does \$425 of damage to a home; the insured has a \$500 deductible. Ans. a) Wind damage of \$835.00 with deductible of \$500.00. 835 - 500 = \$335 b) Theft of stereo system worth \$1,300 with deductible of \$250.00. 1300 - 250 = \$1050 c) Vandalism of \$425.00 with deductible of \$500.00. 425 - 500 = -75 = \$0 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? Ans. Total premiums \$650 + \$575 = \$1225 New Premiums = \$1225.00 - \$122.50 = \$1102.50 Savings \$1225 x .10 = \$122.50 Future value of \$122.50 @ 6% for 10 yrs = 122.5 x 13.180 = \$1,614.55 3. As of 2008, per capita spending on health care in the United States was about \$8,000. If

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BUSN380 Week 6 TCO 4 Problem Set 6 - Home, Automobile, Health, & Life Insurance

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