This program is Copyright © 1978 by Hewlett-Packard and is used here by permission. This program was originally published in "HP-38E/38C Personal Finance Applications" book. This program was transcribed by Kris Collins.
This program is supplied without representation or warranty of any kind. Hewlett-Packard Company and The Museum of HP Calculators therefore assume no responsibility and shall have no liability, consequential or otherwise, of any kind arising from the use of this program material or any part thereof.
The true cost of an insurance policy other than term life insurance is rarely immediately apparent. The cost should include not only the premium payments but also the interest which could have ben earned on the cash value or "saving portion" of the policy.
The following HP-38E/38C program calculates this true cost, (YPT_{t}) per $1000 of protection and the interest rate paid on the savings elements of the policy.
Notes:
References:
Joseph M. Belth, Life Insurance--A Consumer's Handbook, Indiana University
Press, 1973, p. 234.
g P/R g CL P | 00- | g EEX | 19- 25 32 |
Enter | 01- 31 | 3 | 20- 3 |
1 | 02- 1 | ÷ | 21- 71 |
x<>y | 03- 33 | ÷ | 22- 71 |
% | 04- 23 | R/S | 23- 74 |
+ | 05- 51 | g Last x | 24- 25 31 |
RCL 1 | 06- 22 1 | x | 25- 61 |
RCL 2 | 07- 22 2 | RCL 7 | 26- 22 7 |
+ | 08- 51 | + | 27- 51 |
STO 6 | 09- 21 6 | RCL 6 | 28- 22 6 |
x | 10- 61 | ÷ | 29- 71 |
RCL 3 | 11- 22 3 | 1 | 30- 1 |
RCL 4 | 12- 22 4 | - | 31- 41 |
+ | 13- 51 | g EEX | 32- 25 32 |
STO 7 | 14- 21 7 | 2 | 33- 2 |
- | 15- 41 | x | 34- 61 |
RCL 5 | 16- 22 5 | g GTO 00 | 35- 25 7 00 |
RCL 3 | 17- 22 3 | g P/R | |
- | 18- 41 |
REGISTERS | |||
R_{0} | R_{1 }P_{t} | R_{2 }V_{t-1} | R_{3 }V_{t} |
R_{4 }D_{t} | R_{5 }F_{t} | R_{6 }Used | R_{7 }Used |
Key in the annual premium for
policy year t and press STO 1;
Key in the cash value at the beginning
of th year and press STO 2.
Key in the cash value at the end
of the year and press STO 3;
Key in the dividend for that year
and press STO 4;
Key in the face amount of the
policy and press STO 5.
Example:
Consider an average $50,000 face amount cash value policy. The premium of $1,010 is due at the beginning of the year, and a dividend of $165 is received at the end of the policy year. A cash value of $3,302 at the beginning of the year grows to $4,104.
Assuming a 6% savings rate available elsewhere and that insurance protection
could be purchased for $3.00 per $1.00, what is the true cost/$1000 and the
rate of return on your savings?
Keystrokes | Display | |
f CLEAR ALL | 0.00 | |
1010 STO 1 | 1,010.00 | |
3302 STO 2 | 3,302.00 | |
4104 STO 3 | 4,104.00 | |
165 STO 4 | 165.00 | |
50000 STO 5 | 50,000.00 | |
6 R/S | 6.57 | $, true yearly cost (YPT_{t}) |
3 R/S | 2.20 | %, interest paid by policy |
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