Question
Allison (30) is married to Jay (37). They both plan to work until age 66. Allison earns $42,000 annually and Jay earns $104,000 annually. In
Allison (30) is married to Jay (37). They both plan to work until age 66. Allison earns $42,000 annually and Jay earns $104,000 annually. In case one were to die, the survivor will need $116,000 in household income. They expect inflation to be 3.2%. Given their risk tolerance, the appropriate after-tax rate of return from their investments is 9.8%.
Which of the following is the interest rate to calculate Allisons life insurance need using the human life value approach?
| 6.4% |
| 6.6% |
| 3.2% |
| 9.8% |
Which of the following is the number of periods to calculate Allisons life insurance need using the human life value approach?
| 30 |
| 36 |
| 66 |
| 29 |
Which of the following is the payment to calculate Allisons life insurance need using the human life value approach?
| 12,000 |
| 42,000 |
| 104,000 |
| 74,000 |
How much life insurance Allison must purchase for their family using the human life value approach?
| 178,206 |
| 586,230 |
| 623,721 |
| 167,494 |
How much life insurance Allison must purchase for their family using the capital retention approach?
| 656,727 |
| 187,636 |
| 1,626,181 |
| 1,157,090 |
Which of the following is the survivors income need in case Allison were to die?
| 146,000 |
| 116,000 |
| 42,000 |
| 12,000 |
Which of the following is the number of periods to calculate Allisons life insurance need using the income retention approach?
| 36 |
| 30 |
| 29 |
| 66 |
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