Eva is 29 years old and has 2 children, ages 3 and 5. She makes 48,500 a year. Eva decides to buy a 400,000 10-year term policy then renew the policy for another ten years afterwards. To renew the policy the insurance company charges an extra 40% to her premium rate.

Base on the scenario been described in the question, Eva would have been better off selecting the 20-year term policy. This reason is because assuming Eva bought the 20-year term policy, she wont be paying the new charge of extra 40% to her premium rate, compared to when she bought the 10-year term policy then renew the policy for another ten years.

adioabiola adioabiola · Answer 2 · 2022-01-19T13:32:56+01:00

Eva's best option would be to buy on a 20-year policy. This is better because she is able to evade the additional, 40% to her premium rate.

Insurance Premium;

Premiums are percentages of the cost value charged by the insurance company for their services and benefits.

If she pays, 400,000 in ten years, this means she pays 40,000 each year.

Upon renewal, she'll have to 40% more and her new premium will be; 56,000.