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Joe is 30 years old, married, and his wife is expecting their first baby. Joe makes $48,000 per year and has $200 budgeted per month to spend on life insurance. He has started looking at his options and has three choices: BAD WHOLE LIFE BETTER 20-YEAR TERM BEST 20-YEAR TERM $250,000 $500,000 Coverage $250,000 Premium $200/month $13/month $20/month Investments $0 $187/month $180/month Investment Value $34,000 at Age 50 $186,840 $179,847 Investment Value at Age 70 $124,000 $2,222,010 $2,138,835 *Always buy a policy that covers 10-12 times your annual pretax income! R FOUNDATIONS IN PERSONAL FINANCE Life Insurance Plans CHAPTER 9, LESSON 5 PAGE 1 OF 3 1. For each insurance option, how much would Joe pay in total premiums over 20 years compared the amount of coverage he would receive? 2. Which option is the best value for Joe's money? Why? 3. How did Joe arrive at the numbers in the investments row on his chart? 4. Why is Joe thinking about buying life insurance? 4. Why is Joe thinking about buying life insurance? 5. If Joe were to die at age 50, how much money would each option provide for Joe's wife to live on for the next 20 years? FOUNDATIONS IN PERSONAL FINANCE PAGE 2 OF 3 Life Insurance Plans CHAPTER 9, LESSON 5 6. Why should Joe consider buying life insurance? 7. What is the risk for Joe's family if he does not buy life insurance?

Joe is 30 years old, married, and his wife is expecting their first baby. Joe makes $48,000 per year and has $200 budgeted per month to spend on life insurance. He has started looking at his options and has three choices: BAD WHOLE LIFE BETTER 20-YEAR TERM BEST 20-YEAR TERM $250,000 $500,000 Coverage $250,000 Premium $200/month $13/month $20/month Investments $0 $187/month $180/month Investment Value $34,000 at Age 50 $186,840 $179,847 Investment Value at Age 70 $124,000 $2,222,010 $2,138,835 *Always buy a policy that covers 10-12 times your annual pretax income! R FOUNDATIONS IN PERSONAL FINANCE Life Insurance Plans CHAPTER 9, LESSON 5 PAGE 1 OF 3 1. For each insurance option, how much would Joe pay in total premiums over 20 years compared the amount of coverage he would receive? 2. Which option is the best value for Joe's money? Why? 3. How did Joe arrive at the numbers in the investments row on his chart? 4. Why is Joe thinking about buying life insurance? 4. Why is Joe thinking about buying life insurance? 5. If Joe were to die at age 50, how much money would each option provide for Joe's wife to live on for the next 20 years? FOUNDATIONS IN PERSONAL FINANCE PAGE 2 OF 3 Life Insurance Plans CHAPTER 9, LESSON 5 6. Why should Joe consider buying life insurance? 7. What is the risk for Joe's family if he does not buy life insurance?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter14: Planning For Retirement
Section: Chapter Questions
Problem 2FPE
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Joe is 30 years old, married, and his wife is expecting their first baby. Joe makes $48,000 per year and has $200 budgeted per month to spend on life insurance. He has started looking at his options and has three choices: BAD WHOLE LIFE BETTER 20-YEAR TERM BEST 20-YEAR TERM $250,000 $500,000 Coverage $250,000 Premium $200/month $13/month $20/month Investments $0 $187/month $180/month Investment Value $34,000 at Age 50 $186,840 $179,847 Investment Value at Age 70 $124,000 $2,222,010 $2,138,835 *Always buy a policy that covers 10-12 times your annual pretax income! R FOUNDATIONS IN PERSONAL FINANCE Life Insurance Plans CHAPTER 9, LESSON 5 PAGE 1 OF 3 1. For each insurance option, how much would Joe pay in total premiums over 20 years compared the amount of coverage he would receive? 2. Which option is the best value for Joe's money? Why? 3. How did Joe arrive at the numbers in the investments row on his chart? 4. Why is Joe thinking about buying life insurance?
Transcribed Image Text:Joe is 30 years old, married, and his wife is expecting their first baby. Joe makes $48,000 per year and has $200 budgeted per month to spend on life insurance. He has started looking at his options and has three choices: BAD WHOLE LIFE BETTER 20-YEAR TERM BEST 20-YEAR TERM $250,000 $500,000 Coverage $250,000 Premium $200/month $13/month $20/month Investments $0 $187/month $180/month Investment Value $34,000 at Age 50 $186,840 $179,847 Investment Value at Age 70 $124,000 $2,222,010 $2,138,835 *Always buy a policy that covers 10-12 times your annual pretax income! R FOUNDATIONS IN PERSONAL FINANCE Life Insurance Plans CHAPTER 9, LESSON 5 PAGE 1 OF 3 1. For each insurance option, how much would Joe pay in total premiums over 20 years compared the amount of coverage he would receive? 2. Which option is the best value for Joe's money? Why? 3. How did Joe arrive at the numbers in the investments row on his chart? 4. Why is Joe thinking about buying life insurance?
4. Why is Joe thinking about buying life insurance? 5. If Joe were to die at age 50, how much money would each option provide for Joe's wife to live on for the next 20 years? FOUNDATIONS IN PERSONAL FINANCE PAGE 2 OF 3 Life Insurance Plans CHAPTER 9, LESSON 5 6. Why should Joe consider buying life insurance? 7. What is the risk for Joe's family if he does not buy life insurance?
Transcribed Image Text:4. Why is Joe thinking about buying life insurance? 5. If Joe were to die at age 50, how much money would each option provide for Joe's wife to live on for the next 20 years? FOUNDATIONS IN PERSONAL FINANCE PAGE 2 OF 3 Life Insurance Plans CHAPTER 9, LESSON 5 6. Why should Joe consider buying life insurance? 7. What is the risk for Joe's family if he does not buy life insurance?
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