2. How much life insurance do you need? Calculating needs - Part1 Stasia and Patrick Strong are 37 years old and have one daughter, age 5. Stasia is the primary eamer, making $87,000 per year, Patrick does not currently work. The Strongs have decided to use the needs analysis method to calculate the value of a life insurance policy that would provide for Patrick and their daughter in the event of Stasia's death. Stasla and Patrick estimate that while their daughter is still living at home, monthly living expenses for Patrick and their child will be about 53,700 (in current dollars). After their daughter leaves for college in 13 years, Patrick will need a monthly income of 53,100 until he retires at age 65 . The Strongs estimate Patrick's living expenses after 65 will only be $2,700 a month. The life expectancy of a man Patrick's age is 82 years, so the 5 trong family calculates that Patrick will spend about 17 years in retirement. Name of insured Ratrick and Stasia Date Strong Step 1t Financial resources needed after death 1. Annual living expenses and other needs: a. Monthly IVving $3,700 expenses b. Net yearly income needed (1a12) Number of years. 13 15 17 in time period d. Total living needs per time period (161c) Total living expenses (add Line 1d $1,686,000 In addition to these monthly expenses, other future outlays must be accounted for. Before they had a child, Patrick worked as a real estate apent, but his knowledge and skills are now somewhat outdated. Therefore, they include $30,000 for Patrick to go back to school. Additionally, Stasia and Patrick want to create a college fund of $35,000 to fund their child's college education. They estimate that final expenses (funeral costs and estate taxes) will amount to $12,000. Finally, they have taken out a loan for a business venture of $32,200 and a credit card balance of $1,200,8ecause the 5 trongs are renters, they have no outstanding mortgage. Using this information, complete the next portion of Step i to determine the total financlaf resources necued. 2. Special needs 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 Strongs should purchase, they need to factor in additional information. True or False: The value of Patrick and stasla's other savings and investments should be accounted for in the remaining portion of the form, True