Explain how John and Sandy could evaluate their options using each Of the follow

Question

Explain how John and Sandy could evaluate their options using each Of the following concepts and models:

a. attitudes and values

b. cognitive mapping

C. multiattribute

ohn Mulvaney just reached an important milestone in his life-birth of his first child. After seven years as a DINK (dual income-no kids) family, he and his wife Sandy decided it was time add a new member. At that point the couple had solid health insurance plans and policies protecting their home and automobiles. Life insurance was another matter As a novice, John had no idea about the types of poli- cies that were available. He contacted his insurance agent, who represents a variety of insurance companies, and asked for a summary. The agent mentioned three potential forms of life insurance, each offered by a separate company that specialized in a specific type Company A's primary product, term life insurance, has the advantage of being the lowest annual cost option. John would be able to specify the policy's death benefit amount, which typically would be enough to care for his spouse and child (and vice versa for Sandy) for an extended period of time. A term policy covers a stated period of time (often 10 years) and then expires. All premi ums go to the insurance company. The low cost often means a higher death benefit can be purchased at a lower price, especiall for a healthy younger person. When a term policy is renewed, the premium amount rises for the same amount of coverage because the person is now older and has a higher potential of dying. At the same time, the individual's level of income may have also risen making the renewal price easier to manage. Company B's best policy, whole life insurance, features much higher fixed annual premiums, but works in a different manner A cash value accrues as payments are made, and the value of the policy (a type of regular savings) grows over time, often collecting interest on the cash value. The policy also specifies a death benefit. At the end of the policy's specified time (often 40 years or more), the death benefit amount can continue to grow until the policy is redeemed. Many financial analysts argue that the higher costs and low rate of return (the interest rate paid on the case value) make whole life insurance a less viable investment. Others suggest it is a form of "forced" savings that benefits the policy holder over time. The amount of coverage (death benefit) remains the same over the life of the policy. For more coverage, a second policy or a term policy would need to be purchased Company C specializes in universal life insurance, which is a flexible form of permanent life insurance. It features the low cost of term life insurance combined with a savings element which is invested to provide a cash value buildup. John and Sandy would be able to review and change their death benefit amounts, the savings element, and their premiums over time. Also, universal life insurance allows the policyholder to use the interest from his or her accumulated savings to help pay premiums

Explanation / Answer

Explain how John and Sandy could evaluate their options using each Of the following concepts and models:

a.Attitudes and Values

Life Insurance came to John as a part of his mentality as the next natural step. His perception of a value such as Life Insurance seemed reasonable to him because his mind knew that he has his own family now and that it is his duty to protect them as a man or as a person. In his mind, insurances are basic things and all that the gist of it is that you pay a certain amount to safeguard something’s amount, be it hospital bills or totaled cars. Although in this case, he was paying an amount for something that cannot be purchased via currency which was himself but had to do it anyways for his family’s future. John got baffled there because this was a new experience and was not feeling very pleased about it. Hence he laments to Sandy, “It’s complicated.”

b. Cognitive mapping

John’s previous experiences with insurance were a standard routine thing that every human being with a high paying job would do. These previous insurances were for himself. After the birth of his child, his elation triggered the intuitive need of again thinking about taking up an insurance for the sake of his new family, his own family. Of course, he could have decided on the spot about which life insurance policy to opt for but he paused due to the influence of emotion. This is a general rule to all human beings who usually know their way around, but when an anomaly strikes we wait back and reconsider.

C. Multiattribute

Internal: John lamented at the end of the agent’s pitch because he considered himself to be smart and a knowledgeable person about almost everything until that point. Post that he just blamed himself that he had no knowledge about one of the most important element of finance which is Life Insurance. He also blamed himself because he and his wife Sandy had a good marriage and a new family member but he had to accept on his own that something that meant everything to him based out of emotion will need to be weighed by logic and number crunching.

Stable:

John also accepted the fact this situation is in general complicated for everybody.

Unstable:              

John had an idea about how much money he had but had no idea how much will actually be required to safeguard his family post his demise. He also observed the ambiguity of the nature of the insurance company’s policies per se but had to find a way to figure out the changing nature of life anyways.

External: John accepted the simple truth that an insurance policy is a comforting feeling because he already had fat insurance policies safeguarding health and automobiles. After the birth of his son, he realized it is time for him to act sensible, go out and safeguard his family, in the traumatic event of his demise since life per se assures no guarantees. He was standard and real about his decision.

Stable:

He had previous experience of buying insurance and it just always amused him how complicated they were.

Unstable:

The weight of his emotions was making it unbearable to firstly think about his death and then, on the other hand, to think about his family’s future. Owing to the complexity of an important policy he knew he had to take it but had to firmly decide how much can he spare, which one is the best and what amount of money would suffice his family after he is gone.

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