Question

a client wants to purchase a mortgage insurance policy for a loan amount of $300,000. the insurance rate offered is 0.6% annually. what is the annual premium for this mortgage insurance policy? $2,400 $1,200 $1,500 $1,800

Explanation:

Step1: Recall premium formula

Premium = Loan Amount × Rate

Step2: Convert rate to decimal

0.6% = $0.6\div100 = 0.006$

Step3: Calculate premium

Premium = $300000\times0.006 = 1800$

Answer:

\$1,800