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Case Study: The Yearly Price Per Thousand (YPT)

264 Words2 Pages
The Yearly Price per Thousand (YPT) method must be applied to evaluate the cost-effectiveness of your cash value life policies. Using established benchmark costs, it is possible to compare cash value policies based on the age of the insured. Tyler’s YPT = ($1,104 + $7,850) (1 + 0.055) – ($8,750 + $250) ($100,000 - $8,750) (0.001) Tyler’s YPT = $4.89 Tyler’s benchmark for his age group is $4. Although his policy is greater than the $4 rate, it is less than two times the rate and he should keep his policy in force. Mia’s YPT = ($960 + $7,500) (1 + 0.055) – ($8,350 + $250) ($100,000 - $8,350) (0.001) Mia’s YPT = $3.55 Since Mia’s policy is below the $4 benchmark she should keep her life insurance policy in force. Switching
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