Question

Susan has purchased a whole life policy with a death benefit of $200,000. Assuming that she dies in 10 years and the average inflation has been 3 percent, what is the value of the purchasing power of the proceeds?

Answer 1

Answer is: $148,809.52

Explanation:

Susan has purchased a whole life policy with a death benefit of $200,000.

Assuming that she dies in 10 years.

Rate = 3% or 0.03

Future value after 10 years =
`(1+r)^(n)` =
`(1.03)^(10)` = 1.344

Purchasing power of proceeds =
`(200000)/(1.344)`= $148,809.52