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 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
Deciding if additional life insurance is needed and, if so, appropriate type. Use Worksheet 8.1. Harvey Cook, 45, is a recently divorced father of two children, ages 10 and 7. He currently earns $95,000 a year as an operations manager for a utility company. The divorce settlement requires him to pay $1,500 a month in child support and $400 a month in alimony to his ex-wife. She currently earns $35,000 annually as a schoolteacher. Harvey is now renting an apartment, and the divorce settlement left him with about $100,000 in savings and retirement benefits. His employer provides a $75,000 life insurance policy. Harvey’s ex-wife is currently the beneficiary listed on the policy.
What advice would you give to Harvey? What factors should he consider in deciding whether to buy additional life insurance at this point in his life? If he does need additional life insurance, what type of policy or policies should he buy? Use Worksheet 8.1 to help answer these questions for Harvey.
Chapter 8 Solutions
PFIN Online, 1 term (6 months) Printed Access Card for Billingsley/Gitman/Joehnk's PFIN 6
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- Belinda, a 55 year old single woman with no dependents, has a $75,000 group term life insurance policy through her employer. Her employer pays the premiums on Belinda's group term life insurance policy. How much per year will Belinda have to include into her gross income associated with the cost of this insurance? Assume the cost of this insurance is $0.43 per month per $1,000 of coverage. Multiple Choice $0 $65 $129 None of the abovearrow_forwardYou are a dual-income, no-kids family. You and your spouse have the following debts: Mortgage = $261,000; Auto loan = $10,000; Credit card balance = $2,150; and other debts = $6,200. Further, you estimate that your funeral will cost $9,000. Your spouse expects to continue to work after your death. Using the DINK method, what should be your need for life insurance? Total insurance need $ 288,350arrow_forwardChoosing 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…arrow_forward
- 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_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_forwardMs. Asma is aged 40 years. She consulted Oman United Insurance Company to plan for the higher education of her daughter. Therefore, she asked for a straight life policy with a face value of OMR 80,000 with a semi-annually payment basis. How much will Ms. Asma reimbursed Oman United Insurance Company? 10-Year Fixed Rate 20-Year Fixed Rate Straight-Life Age Male Female Male Female Male Female 20 1.21 1.17 1.82 1.76 2.72 2.63 30 1.27 1.23 1.91 1.85 3.49 3.38 40 1.46 1.41 2.20 2.13 4.02 3.88 50 2.41 2.33 3.63 3.51 5.18 5.01 60 4.72 4.56 7.11 6.88 8.21 7.93 O a. OMR 158.304 b. OMR 80.704 C. OMR 27.160 d. OMR 310.4arrow_forward
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