Insurance companies always offer a discount If you pay your annual premium as a one-time payment or lump sum. Your

annual premium is $1,200. You will receive a 6% discount If you pay all at once. How much will you save per year?

Answer: Your savings per year will be $72

Explanation: For an insurance premium, premiums are by standard, paid once every month. Hence an insurance policy with an annual premium of $1200 would result in a monthly premium payment of;

Monthly Premium = 1200 / 12

Monthly Premium = 100

However, there is an option to pay all $1200 at once, that is, one lump sum just once in the entire 12-month period and taking that option would offer a discount on the insurance premium which is given as 6% and this is calculated as shown;

Premium = 1200

Discount = 0.06 (6 %)

Discount calculated = 1200 * 0.06

Discount calculated = 72

The calculations and result shows that the option of paying the premium at once would result in a savings of $72 per year.