The cost of $500,000 worth of 20-year term life insurance for Derek is $96.21 per month. If Derek's employer covers 85% of this cost, how much is deducted from Derek's gross income per year for life insurance?

(1) Answers

Alright, the first thing we should have to do is find the total cost per year of his insurance. To do that, we multiply $96.21 by the 12 months in a year to get $1154.52. This is the cost of his insurance per year. Next, we need to find out how much his boss covers, which we know is 85% of the total cost. SO what we can do is multiply the yearly cost ($1154.52) by the percent his boss covers (.85) to get $981.342. This is how much his boss covers per year. Lastly, to find out how much Derek pays for insurance yearly, we just need to subtract how much his boss pays ($981.342) from the total yearly cost  ($1154.52), which leaves us with $173.178, which is how much Derek pays yearly for his insurance, which should be your answer.

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