The financial impact of premature death varies by family type. For each of the following, explain the financial impact of premature death on surviving family members. Treat each event separately.

a. Kelly, age 35, is a single parent with two small children, ages 3 and 5. She earns $25,000 annually as a waitress in a local restaurant. She has $10,000 of life insurance, which her parents purchased for her when she was a child.

On her way home from work, Kelly is killed by a motorist who failed to stop at a red light. The restaurant does not provide health insurance or retirement benefits to its employees.

b. David, age 48, is married with two preschool-age children. He is an auto mechanic who is employed at a small auto repair firm and earns $30,000 annually. His spouse is not in the labor force but remains at home to care for the children. David is diagnosed with cancer of the pancreas and is forced to withdraw from the labor force. He dies nine months later. At the time of his death, medical bills total $150,000. David has no health insurance because his employer was forced to drop its group health insurance plan due to a substantial increase in premiums. He has only $30,000 of group life insurance provided by his employer.

c. Susan, age 47, is a nurse at a local hospital and earns $50,000 annually. She is married to Brandon, age 48, who is employed by a telephone company and earns $35,000 annually. The company provides $35,000 of group life insurance on his life. The couple has two children. Jeremy, age 20, is a sophomore at a state university, and both parents help pay for his tuition.

Alex, age 18, is a senior in high school and plans to attend college. Five days before Alex is scheduled to graduate from high school, Brandon is killed unexpectedly after his motorcycle hits a pothole in the road and he is thrown off the motorcycle and struck by an oncoming vehicle. Brandon participated in the company’s 401(k) plan with an account balance of

$25,000 at the time of his death.