PFIN Online, 1 term (6 months) Printed Access Card for Billingsley/Gitman/Joehnk's PFIN 6
6th Edition
ISBN: 9781337118026
Author: Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher: Cengage Learning
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Chapter 15, Problem 2FPE
Summary Introduction
To discuss: Importance of writing a will for person C and person E.
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You are a dual-income, no-kids family. You and your spouse have the following debts:
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Importance of writing a will. Emilia and Kevin Boyd are in their mid-30s and have two children, ages 8 and 5. They have combined annual income of $150,000 and own a house in joint tenancy with a market value of $410,000, on which they have a mortgage of $300,000. Kevin has $100,000 in group term life insurance and an individual universal life policy of $150,000. However, the Boyd’s haven’t prepared their wills. Kevin plans to draw one up soon, but they think that Emilia doesn’t need one because the house is jointly owned. As their financial planner, explain why it’s important for both Emilia and Kevin to draft will as soon as possible.
Tom and Tina are updating their financial plan and are concerned that they might not have enough life insurance coverage for their family, which includes two children, ages 4 and 10. They have determined that their annual income is $70,000 and their net worth is now $150,000. What is the amount of life insurance they should carry using the easy method?
Chapter 15 Solutions
PFIN Online, 1 term (6 months) Printed Access Card for Billingsley/Gitman/Joehnk's PFIN 6
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- Emilia and Kevin Boyd are in their mid-30s and have two children, ages 8 and 5. They have combined annual income of 150,000 and own a house in joint tenancy with a market value of 410,000, on which they have a mortgage of 300,000. Kevin has 100,000 in group term life insurance and an individual universal life policy for 150,000. However, the Boyds havent prepared their wills. Kevin plans to do one soon, but they think that Emilia doesnt need one because the house is jointly owned. Explain why its important for both Emilia and Kevin to draft wills as soon as possible.arrow_forwardSharon and Brian are in good health and have reasonably secure careers. Each earns $45,000 annually. They own a home with a $125,000 mortgage; they owe $25,000 for their car loans and have $22,000 in student loans. If one should die, they think that funeral expenses would be $12,000. What is their total insurance need using the DINK method?arrow_forwardKrista and Landor are new parents. They have a two-month-old baby girl and they are considering expanding their family in the future. They have purchased life insurance with a child coverage rider in the amount of $5,000. Unfortunately, their baby girl becomes gravely ill and passes away. How will the insurer deal with their death claim relating to the child coverage rider? Select one: a. b. The insurer will pay the claim for the full amount. The insurer will pay a claim for only half of the full amount to keep the child coverage rider in force for the next child. c. The insurer will deny the claim as Krista and Landon did not purchase accidental death insurance for theirarrow_forward
- Hi, my name is Titus. I am having trouble answering this question. Could you help me out? Life Insurance Needs for a Young Married Couple. Amy and Mack Holly from Rapid City, South Dakota, have been married for three years. They recently bought a home costing $212,000 using a $190,000 mortgage. They have no other debts. Mack earns $62,000 per year, and Amy earns $71,000. Each has a retirement plan valued at approximately $20,000. They recently received an offer in the mail from their mortgage lender for a mortgage life insurance policy of $190,000. Their only life insurance currently is a $20,000 cash-value survivorship joint life policy. They each would like to provide the other with support for at least five years if one of them should die. What amount of coverage should they get? Explainarrow_forwardAlex wants to provide funding in the event of his death for his daughter Ellie, age 8, to attend four years of college, starting at age 18. The current annual cost of tuition is $20,000. Assume inflation of 6.5% and after-tax earnings of 7%. If Alex wants to have enough life insurance to assure adequate funds for Ellie when she begins college (should he die today), approximately how much insurance should he have for this need alone? (Round your answer to the nearest dollar.) A)$113,764 B)$75,806 C)$75,451 D)$79,441arrow_forwardMartha and Louis Mitchell are a dual-career couple who just had their first child. Louis, age 30, already has a group life insurance policy, but Martha's employer does not offer a life insurance benefit. A financial planner is recommending that the 27- year-old Martha buy a $250,000 whole life policy with an annual premium of $1,670 (the policy has an assumed rate of earnings of 5 percent a year). Help Martha evaluate this advice and decide on an appropriate course of action .arrow_forward
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