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Problem Set 6
1. For each of the following situations, what amount would the
insurance company pay?
a. Wind damage of $835; the insured has $500 deductible.
b. Theft of a stereo system worth $1,300; the insured has a $250
deductible.
c. Vandalism that does $425 of damage to a home; the insured has a
$500 deductible.
2. Beverly and Kyle Nelson currently insure their cars with separate
companies paying $650 and $575 a year. If they insure both cars with
the same company, they would save 10 percent on the annual
premiums. What would be the future value of the annual savings over
ten years based on an annual interest rate of 6 percent?

3. As of 2008, per capita spending on health care in the United States
was about $8,000. If this amount increased by 5 percent a year, what
would be the amount of per capita spending for health care in 10
years?
4 Sarah’s comprehensive major medical health insurance plan at work
has a deductible of $750. The policy pays 85 percent of any amount
above the deductible. While on a hiking trip, she contracted a rare