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1) An insurance company sells a twenty-year term life insurance policy with a face value of $200,000 to a 45-year old woman. Her annual premium is $1,500. If the woman dies after paying premiums for 15 years, what is the insurance company’s gain or loss?

2) The probability that a 42-year old man will die before his 43rd birthday is about 0.29%. If an insurance company insures 200,000 42-year old men, how many are expected to die before their 43rd birthdays?

3) An insurance company uses the mortality table below to calculate their risk when writing life insurance policies.

|Age at Death (females) |60 |61 |62 |63 |

|Mortality Rate |0.007445 |0.08187 |0.08959 |0.09747 |

Based on the table, what is the probability as a percent that a 62-year old woman will live to see her 63rd birthday?

4) Where does the money come from to pay Social Security benefits today to those who are receiving them? Why is this a concern for the ‘baby boomer’ generation?

5) Mr. Jones is almost 67 years old and is preparing to retire. Over his life he earned an average of $4,595 per month after adjusting for inflation. The formula for calculating monthly Social Security benefits is 90% of the first $680 earned, then 32% of the earnings over $680. What will his monthly benefit be?

6) Anne opened a retirement account that has an annual yield of 7.5%, compounded monthly. She is planning to retire in 25 years. How much should she put into the account each month so that she will have $750,000 when she retires?

7) Use the 2006 tax schedule for married taxpayers filing jointly below. What equation represents the taxable income in the interval over $123,700 but not over $188,450?

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8) A couple has a taxable income of $92,750. They discovered that they are able to receive a $5,500 tax deduction for contributions to their traditional IRA. How will this tax deduction affect their taxes?

9) In 2009, the maximum taxable income for Social Security was $102,000 and the rate was 6.2%. The rate for Medicare tax was 1.45%. If Jim’s taxable income as an attorney was $75,000 that year, how much did he pay in FICA taxes?

10) John’s full Social Security retirement benefit is $5,500. He started collecting Social Security benefits at age 65, so his benefits are reduced by about 13.3%. What will his monthly benefit be?

11) Rollie had $18,000 in medical expenses last year and has no medical insurance. The IRS allows medical expense deductions for any amount that is over 7.5% of a taxpayer’s adjusted gross income. If his adjusted gross income is $40,000, how much can he claim as a medical deduction?

12) Tina’s employer offers a pension plan that is the product of the career average of her salaries while working there, the number of years of service, and a 2.75% multiplier. She calculates the average of her 25 years of salaries to be $75,400. What is her monthly pension?

13) What is the difference between an IRA and a 401k?

14) Gina started a new job and wants to verify that her net pay has been computed correctly. Her gross pay per pay period is $1,175.20. She has the following deductions: FICA tax 6.2%, Medicare tax 1.45%, federal withholding tax $87.50, state withholding tax $65.28, retirement insurance contribution $15.00, disability insurance fee $10.00, medical insurance fee $25.00, and dental insurance fee $10.00. What should her net pay be for this pay period?

15) An insurance company uses the mortality table below to calculate their risk when writing life insurance policies.

|Age at Death (males) |50 |51 |53 |54 |

|Mortality Rate |0.0043 |0.0049 |0.0052 |0.0055 |

If this company insures 320,000 50-year old men, how many are expected to die before they reach their 51st birthday?

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