Homework
Life Insurance Needs Approach
1. Jean has a term life policy with a death benefit of $100,000. Assuming the following,
how much more life insurance does Jean need (using needs analysis)?
• Final expenses of $20,000
• Husband needs $85,000 per year (age 40) while his only child is living with
him
• Husband will need $75,000 per year after child leaves home
• Child is 10 years old and need $100,000 for college
• Husband will receive Social Security payments of $10,000 per year starting at
age 67
• Husband earns $55,000 per year at job and will continue working until age 67
• Assume Husband will live to age 90
• The family has a $220,000 mortgage and $10,000 in car loans which should be
paid off at Jean’s death
• Family receives $10,000 per year in Social Security survivor benefits until
child reaches age 18.
• Return on invested money is 5%
• Expected inflation rate is 2%
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