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How much interest will be earned on the policy benefits

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A person wants to buy a life insurance policy that would yield a large enough sum of money to provide semiannual payments for 20 years of $25,000 to surviving members of the family. The payments would begin 6 months from the time of death. It is assumed that interest could be earned on the sum received from the policy at a rate of 8 percent per year compounded semiannually.

Question 1: What amount of insurance should be taken out so as to ensure the desired annuity?

Question 2: How much interest will be earned on the policy benefits over the 20 year period?

Reference no: EM132459231

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