PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN: 9781337117005
Author: Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher: Cengage Learning
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Chapter 8, Problem 3FPE
Summary Introduction
To discuss: The advises and take suitable decision for person X.
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Martha 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 .
Marthda 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 finanical planner is recommending that the 27-year-old Martha buy a $250,000 whole life policy with an annual preminum 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
Choosing among types of life insurance. Camila Rodriguez, a 38-year-old widowed mother of three children (ages 12,10, and 4), works as a product analyst for a major consumer products company. Although she’s covered by a group life insurance policy at work, she feels, based on some rough calculations, that she needs additional protection. Leon Thompson, an insurance agent from Insurance Advisers, has been trying to persuade her to buy a $150,000, 25-year, limited payment whole life policy. However, Camila favors a variable life policy. To further complicate matters, Camila’s father feels that term life insurance is more suitable to the needs of her young family.
a. Explain to Camila the differences between (i) a whole life policy, (ii) a variable life policy, and (iii) a term life policy.
b. What are the major advantages and disadvantages of each type of policy?
c. In what way is a whole life policy superior to either a variable life or term life policy?In what way is a variable…
Chapter 8 Solutions
PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
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- explain how you would position the applicable and needed insurance solutions to fit both the clients budget and needs for the following instances: Winston and Neisha have been married for almost 40 years. Neisha is 60 and Winston is 63. Neisha works in HR with her present company and has $300,000 in retirement savings. Winston works for the state government which provides him a pension of $1,500 per month (100% transferrable to Neisha) and $200,000 in a 457b plan. They have no debt and full health care benefits through Winston. They will have $2,500 per month combined Social Security income, no debt, and monthly expenses of $5,000. They plan to retire when Winston is 65 years old. Austin and Jenifer are both 35 years old with two (2) children ages 7 & 9. Austin works as an IT Manager with a medium-size firm and his salary is $120,000 annually. Jenifer stays at home with their children and works part-time earning approximately $10,000 to $15,000 a year. They had no other debt…arrow_forwardThe Baulding family has a basic health insurance plan that pays 80 percent of out-of-hospital expenses after a deductible of $ 250$250 per person. If three family members have doctor and prescription drug expenses of $ 684$684, $ 1 comma 496$1,496, and $ 188$188, respectively, how much will the Baulding family and the insurance company each pay? How could they benefit from a flexible spending account established through Mr. Baulding's employer? What are the advantages and disadvantages of establishing such an account? Question content area bottom Part 1 The Baulding family will payarrow_forwardMarie wants to provide retirement income for her dependent parents for 35 years should she die. Marie earns $67,500 and feels that her parents could live on 65% of that amount. If the insurance funds could be invested at 5%, how much life insurance does she purchase using the desired income method? Group of answer choices $1,273,499 $1,450,087 $932,743 $877,500arrow_forward
- The Baulding family has a basic health insurance plan that pays 80 percent of out-of-hospital expenses after a deductible of $250 per person. If three family members have doctor and prescription drug expenses of $984, $1,507, and $213 respectively, how much will the Baulding family and the insurance company each pay? How could they benefit from a flexible spending account established through Mr. Baulding's employer? What are the advantages and disadvantages of establishing such an account? The Baulding family will pay? The insurance company will pay? How could they benefit from a flexible spending account established through Mr. Baulding's employer? What are the advantages and disadvantages of establishing such an account?arrow_forwardJudy is considering a life insurance coverage between a whole life plan, universal life plan and term life plan. She is newly married and has just recently delivered a baby. Currently she has limited budget and may consider to stop working for two years to take care of the baby. Advise Judy THREE (3) benefits each for the traditional whole life insurance, universal life insurance and term life insurance. Recommend with justification which plan is most suitable to her.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
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