Write a 175- to 350-word response to Case 6 on p. 317 in Ch. 10 of Personal Finance.
Complete “Do the Math”, #2 on p. 344 in Ch. 11 of Personal Finance.
Complete #1, “Calculating Life Insurance Need”, on p. 376 in Ch. 12 of Personal Finance.
Submit your assignment.
| Determining My Life Insurance Needs (page 353) | |||
| NOTE: Results here may differ slightly than when using Appendix A in text due to rounding. | |||
| Factors Affecting Need | Sample Only | Insert Your Own Figures | |
| 1. Income-replacement needs* | $823,219 | ||
| 2. Final-expense needs | $ 12,000 | ||
| 3. Readjustment-period needs | $ 19,000 | ||
| 4. Debt-repayment needs | $ 10,000 | ||
| 5. College-expense needs | $ 75,000 | ||
| 6. Other special needs | $ – | ||
| 7. Subtotal (combined effects of items 1–6) | $ 939,219 | ||
| 8. Government benefits** | $390,370 | ||
| 9. Investment Assets Available | $0 | ||
| 10. Current Life Insurance In Place | $ 98,000 | ||
| 11. Life insurance needed | $ 450,848 | ||
| *Income Replacement Needs Calculator | |||
| Current Annual Income | $56,000 | ||
| Percent of Annual Income To Be Replaced | 75% | ||
| Annuity Amount (% desired of annual income) | $42,000 | ||
| i (assumed interest rate | 3.00% | ||
| n (number of annuity payments) | 30 | ||
| PV (present value) of Income Replacement Needs | $823,219 | ||
| **Present Value of Social Security Benefits Calculator | |||
| Estmated Monthly Benefit (See Appendix B in Text) | $2,725.00 | ||
| Estimated Annual Benefit | $32,700 | ||
| i (assumed interest rate | 3.00% | ||
| n (number of annuity payments) | 15 | ||
| PV (present value) of Government Benefits | $390,370 | ||