Future Business Leaders of America (FBLA) Business Calculations Practice Test

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Dive into the FBLA Business Calculations Test. Sharpen your analytical skills with multiple-choice questions and gain insights with detailed explanations. Excel in your exams!

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If the cost per $1000 life insurance policy for an 18-year-old male is $2.32, what is the premium for a $50,000 policy?

$180
$116
$232
$500

The correct answer is: $116

To determine the premium for a $50,000 life insurance policy when the cost per $1,000 of coverage is $2.32, you first need to calculate how many groups of $1,000 there are in a $50,000 policy. This is done by dividing the total amount of the policy by $1,000: \[ \frac{50,000}{1,000} = 50 \] Next, you multiply the number of $1,000 increments by the cost per increment: \[ 50 \times 2.32 = 116 \] This calculation shows that the total premium for a $50,000 policy is $116, making it the correct answer. This method underscores the importance of understanding how to break down insurance premiums based on rates provided per certain dollar amounts of coverage. By following the process of calculating the increments of $1,000 and applying the rate, you're able to arrive at the premium effectively.