Question

Ron has a life insurance policy with a face value of $100,000 and a cost of living rider. If the consumer price index has gone up 4%, how much may Ron increase the face value of the policy

Answer 1

Answer:

4,000

Explanation:

Ron has a life insurance policy with a face value of 100,000

The consumer price index has gone up by 4%

Therefore the increase in the policy face value can be calculated as follows

= 100,000 × 4/100

= 100,000 × 0.04

= 4,000

Answer 2

Ron increase the face value of the policy is $4,000

Given that;

Face value of life policy = $100,000

Consumer price index growth = 4%

Find:

Ron increase the face value of the policy

Computation:

Ron increase the face value of the policy = Face value of life policy × Consumer price index growth

Ron increase the face value of the policy = 100,000 × 4%

Ron increase the face value of the policy = $4,000

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