1) Victor has a $10,000 cash-value policy purchased 15 years ago when he was 25 years old. The policy will be paid at age 65. Using a table in the chapter, find the cash value of the insurance policy. Explain the other two options available to Victor.

2) Jen caused a 3 car accident near her home in Akron, OH. She has the Ohio minimum liability coverage with no collision or comprehensive coverage. Jason, the driver of one of the other cars, suffered injuries leading to $42,000 in medical bills. No other injuries were suffered. The damage to Jens car was $2000 and she caused $22,000 in damage to the other two cars.

- How much of the amount of the bodily injury and property damage will be covered by the insurance policy? - How much of the amount of the bodily injury and property damage will be paid for by Jen?

3) Anna and Mike are considering their life insurance options. They both make about $50,000 per year. In the event that something happens to one of them, they figure they will need to cover the other persons salary for 80% for 10 years. Anna and Mike do NOT participate in Social Security. They are doing a needs-based approach and want to include $5,000 in final costs to cover the funeral arrangements and $10,000 for readjustment period needs. Based on the needs-based approach, what face value of life insurance is needed? [Assume that Anna and Mike have no other resources to put toward this need and that they would invest the life insurance proceeds in an account returning 4% annually.]

4) Bob is 37 years old and is an account manager with a large telecom company. Hes been dragging his feet with his retirement plan, opting instead for expensive trips to Vegas and Aspen. Hes decided its time to get serious about saving for his retirement. He plans to retire at age 67 and travel the world. Because of this plan, he figures he needs approximately $70,000/ year in retirement. His grandfather lived until he was 86 and his dad is in perfect health at age 70, therefore Bob figures he should plan to be around until hes 90. So far, he has $11,000 saved for retirement and because of his aggressive investment philosophy, is planning for a return on all his investments before retirement of 8%. Following retirement he will invest more conservatively and will plan for a 5% return on investments. His companys retirement plan is defined contribution, so he doesnt plan on getting a pension. He is not counting on social security to be around, so he isnt including that in his plan. Thus, his entire retirement will be funded on his own savings.

- How much will Bob have saved at the end of his work life, if he doesnt add his current savings? 17) How much money will Bob need during retirement based on his calculations?

- How much will Bob need to save EACH YEAR to be ready for retirement at age 67? 19) Based on text estimates, what is the fair price for a $1,000,000 term life insurance policy for a 45 year old female who smokes? Bob recently had surgery. His total bill for this event, which was his only health care expense for the year, came to $9,890. His health insurance plan has a $500 deductible and an 80/20 coinsurance provision. The cap on Bobs coinsurance share is 2,000.

- How much of the bill will Bob pay?

- How much of the bill will be paid by Bobs insurance?

- Now assume the actual bill was $13,890 (not $9,980). How much will Bob pay?

5) Jim is 52 years old. He is in the 28% marginal tax bracket and earned 6.25% this year on the funds in his IRA. Ignoring any taxes paid on the original investment, what is Jims after tax return on his IRA this year?