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Life Insurance Needs Approach - Finance and Economics - Homework, Exercises of Finance

Life Insurance Needs Approach, Life Insurance, Life Policy, Death Benefit, Needs Analysis, Final Expenses, Child Leaves Home, Social Security Payments, Per Year, Invested Money are some points in this file. This is homework for subject Finance and Economics.

Typology: Exercises

2011/2012

Uploaded on 12/18/2012

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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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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, - 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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