Calculate the annual net cost per $1000 of life insurance at the end of 20 years using the traditional net cost method.

To calculate the annual net cost per $1000 of life insurance at the end of 20 years using the traditional net cost method, we need to subtract the cash value at the end of 20 years and the accumulated value of the dividends at 5% for 20 years from the total premiums paid over 20 years.

The total premiums paid over 20 years can be calculated by multiplying the annual premium by the number of years the policy is in effect, which is 20 years. The total premiums paid would therefore be $230 * 20 years = $<<230*20=4600>>4600.

The accumulated value of the dividends at 5% for 20 years can be calculated by multiplying the total dividends received by the factor corresponding to an annual interest rate of 5% compounded annually for 20 years. This factor can be calculated using the formula:

F = (1 + r)^n

Where F is the factor, r is the annual interest rate, and n is the number of years. Plugging in the values, we get:

F = (1 + 0.05)^20 = 1.637060565

The accumulated value of the dividends at 5% for 20 years is therefore $1613 * 1.637060565 = $2660.

The annual net cost per $1000 of life insurance at the end of 20 years is then calculated by dividing the total cost (total premiums minus cash value and accumulated dividends) by the face value of the policy ($10,000) and multiplying by 1000:

(($4600 – $3620 – $2660) / $10,000) * 1000 = $80/year/1000

To calculate the annual surrender cost index per $1000 of life insurance at the end of 20 years, we need to subtract the cash value at the end of 20 years from the accumulated value of the premiums at 5% for 20 years, and divide the result by the face value of the policy ($10,000) and multiply by 1000:

(($7985 – $3620) / $10,000) * 1000 = $439/year/1000

Finally, to calculate the annual net payment cost index per $1000 of life insurance at the end of 20 years, we need to subtract the accumulated value of the dividends at 5% for 20 years from the accumulated value of the premiums at 5% for 20 years, and divide the result by the face value of the policy ($10,000) and multiply by 1000:

(($7985 – $2352) / $10,000) * 1000 = $566/year/1000