2. How much life insurance do you need? Calculating needs - Part1 Larry and Ginny Stewart are 38 years old and have one daughter, age 9. Larry is the primary earner, making $140,000 per year. Ginny does not currently work. The Stewarts have decided to use the needs analysis method to calculate the value of a life insurance policy that would provide for Ginny and their daughter in the event of Larry's death. Larry and Ginny estimate that while their daughter is still living at home, monthly living expenses for Ginny and their child will be about $4,000 (in current dollars). After their daughter leaves for college in 9 years, Ginny will need a monthly income of $3,300 until she retires at age 65. The Stewarts estimate Ginny's living expenses after 65 will only be $2,900 a month. The life expectancy of a woman Ginny's age is 87 years, so the Stewart family calculates that Ginny will spend about 22 years in retirement. Using this information, complete the first portion of the needs analysis worksheet to estimate their total living expenses. Life Insurance Needs Analysis Worksheet P Life Insurance Needs Analysis Worksheet Name of insured Larry and Ginny Stewart Step 1: Financial resources needed after death 1. Annual living expenses and other needs Date July 31, As 2015 Period 1 Period 2 Period 3 Monthly living $4,000 expenses Net yearly income needed (la x 12) Number of years in time period Total living needs $ per time period (1bx 1c) 22 Texnoncar (add Line Id $1.910.400 Total living expenses (add Line 1d) $1,910,400 for each period to check your total): In addition to these monthly expenses, other future outlays must be accounted for. Before they had a child, Ginny worked as a financial consultant, but her knowledge and skills are now somewhat outdated. Therefore, they include $40,000 for Ginny to go back to school. Additionally, Larry and Ginny want to create a college fund of $60,000 to fund their child's college education. They estimate that final expenses (funeral costs and estate taxes) will amount to $18,000. Finally, they have taken out a loan for a business venture of $32,200 and a credit card balance of $1,200. Because the Stewarts are renters, they have no outstanding mortgage. Using this information, complete the next portion of Step 1 to determine the total financial resources needed. 2. Special needs a. Spouse's education fund b. C Child's college fund Other needs 3. Final expenses (funeral costs and estate taxes). a. b. Debt liquidation House mortgage Other loans $ $ 50 C. 2. Special needs a b: Spouse's education fund Child's college fund Other needs $ $ $0 3. Final expenses (funeral costs and estate taxes) 4. Debt liquidation $ a. House mortgage b. Other loans S C. Total debt (4a+ 4b) $0 5. Other financial needs Total financial resources needed (add right-hand column plus the Total Living Expenses you calculated): S The second half of the needs analysis worksheet is not shown on this page. To complete the worksheet and determine the value of the life insurance policy the Stewarts should purchase, they need to factor in additional Information. True or False: Larry's future salary (if he does not die) should be accounted for in the remaining portion of the form. O True O False