Question 8 10 points Euneral Costs and uninsured medical bih$15,000 e Income sup

Question

Question 8 10 points Euneral Costs and uninsured medical bih$15,000 e Income support for her son $1.800 monthly for 15 years o Pay off mortgage on home $190.000 o Pay off car loan and credit card debts $34,000 e College 150,000 Checking account $15.000 IRA acoount $23,000 any,should Lisa purchase to a Ignoring the availability of Social Secsurity survivor benefts, how much additional life insurance. if approach? lAssume that the rate of retun earned on the policy proceeds is equal to the rate of inflation b.How much additional Ilfe insurance, if any,is needed if estimated Social Security survivor benefits in the amount of $600 montbly For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 Mac) the answer is 33

Explanation / Answer

To find her target insurance amount, Lisa needs to follow this:

1. Calculate obligations: Add your annual salary (times the number of years that you want to replace income) + your mortgage balance + your other debts + future needs such as college and funeral costs. If you’re a stay-at-home parent, include the cost to replace the services that you provide, such as child care.

2. From that, subtract liquid assets such as: savings + existing college funds + current life insurance.

To calculate his life insurance needs, Lisa would add her obligations:

This totals $1,763,000. From this, Lisa would subtract:

$15,000 in checking account
$23,000 in IRA account
$50,000 of group life insurance

This means that Lisa should buy a $1.7million ($1,675,000) term policy.

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