Using the chain ratio method, estimate the market potential for life insurance i

Question

Using the chain ratio method, estimate the market potential for life insurance in the military (active duty and veterans) market for a country. Assume that there are 22,600,000 veterans. Additionally, the number of active duty personnel is 1,972,175 The percentage of the population that has life insurance is 51%. Also assume the average price for a for life insurance is $3,000 and veterans and active duty personnel will purchase only one life insurance policy. 1. Given the data, what is the number of buyers in this market? 2. Given the data, what is the market demand?

Explanation / Answer

Total Population= total veterans +tota active duty personnel= 22,600,000+1,972,175= 24,572,175

51% of population has Life insurance= 0.51*24,572,175= 12,531,809.8

49% do not have the life insurance= 0.49*24,572,175=12,040,365.8

1. Estimate of no. of buyers=12,040,365.8

2. Market Demand= 12,040,365.8 buyers with 1 policy per person so=12,040,365.8*1*3000=

$36121097400

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