Create an Account

Home / Questions / Assume that Darrell s gross annual income is \$54000 and Lena s is \$64000 Their insurance a...

Assume that Darrell s gross annual income is \$54000 and Lena s is \$64000 Their insurance agent has given them a multiple earnings table showing that the earnings multiple to replace 75 percent of

Assume that Darrell s gross annual income is \$54,000 and Lena s is \$64,000. Their insurance agent has given them a multiple earnings table showing that the earnings multiple to replace 75 percent of their lost earnings is 8.7 for Jacob and 7.4 for Lena. Use this approach to find the amount of life insurance each should have if they want to replace 75 percent of their lost earnings. 2. Use Worksheet 8.1 to find the additional insurance needed on both Darrell s and Lena s lives. (Because Darrell and Lena hold secure, well-paying jobs, both agree that they won t need any additional help once the kids are grown; both also agree that they ll have plenty of income from Social Security and company pension benefits to take care of themselves in retirement. Thus, when preparing the worksheet, assume "funding needs" of zero in Periods 2 and 3.) 3. Is there a difference in your answers to Questions 1 and 2? If so, why? Which number do you think is more indicative of the Jennings life insurance needs? Using the amounts computed in Question 2 (employing the needs approach), what kind of life insurance policy would you recommend for Darrell? For Lena? Briefly explain your answers. Darrell and Lena Jennings are a two-income couple in their early 30s. They have two children, ages 6 and 3. Darrell s monthly take-home pay is \$3,600, and Lena s is \$4,200. The Jennings feel that, because they re a two-income family, they both should have adequate life insurance coverage. Accordingly,

May 15 2020 View more View Less