answer section 5 question 1-7 and please show work! details provided.

Section 5: Risk Management Analysis (13 points) Using the following information, please evaluate your client's risk management portfolio and make recommendations 1. Eric participates in his employer sponsored HMO health insurance plan and all family members are covered by this plan. The plan has no deductibles, 80/20 coinsurance for in-net work and 60/40 for out of network, and has a $3,000 maximum annual out-of-pocket limit. His portion of premium for the family coverage is $3,000 per year and is paid through payroll deduction. 2. Eric also participates in his employer sponsored dental insurance. His portion of premium for the family coverage is $250 per year. 3. Eric and Kathy do not have long-term disability insurance. 4. Eric purchased a 30-year term S1 million life insurance 10 years ago when their first child Clark was born. His life insurance annual premium is $820. Eric also has employer sponsored $250,000 life insurance and his employer pays the premium. Kathy only has employer sponsored $50,000 life insurance and her employer pays the premium. Kathy does not smoke and is overall healthy. 5. They have a HO-3 policy (replacement value and open perils endorsement) with a $1,000 deductible, a dwelling value of $500,000 and $100,000 liability coverage per occurrence. Their current premium is $1,200. 6. Their current auto insurance coverage for two cars is as following Liability Medical Payments Physical Damage, Own Car Uninsured Motorist Collision Deductible Comprehensive Deductible Annual Premium $100,000/$300,000/$50,000 no coverage Actual Cash Value $50,000/accident $100 $250 $1,380 7. You called several insurance agents and collected the following information: 1) Annual premium for a 30-year term half million life insurance for a non-smoker, healthy woman age 37 is quoted at $685. 2) Annual premium for a 20-year term $1 million life insurance for a non-smoker, healthy women age 37 is quoted at $812. 3) $1 million umbrella policy is quoted at $200 for 2018, but requires underlying $300,000/$500,000/$100,000 liability on auto insurance. 4) Eric and Kathy's auto insurance company quoted them an annual premium of $1,560 for 2018 if they want to increase liability coverage to $300,000/$500,000/$100,000: Eric Williams (age 39) and Kathy Williams (age 37) are married with three children. Eric is a CPA working at an accounting firm with an annual salary of $115,000. Kathy is client relationship manager at a local bank with an annual salary of $75,000. Following are financial data you collected from Eric and Kathy. Balance as of Balance as of Income/Expense 12/31/16 . 12/31/17 for year 2017 Savings Account $17,000 $19,500 Checking Account $5,000 $8,500 Investment Account $86,649 $93,579 Eric's 401(k) contribution $6,900 Eric's 401(k) $57,465 $66,062 Kathy's 401(k) contribution $3,750 Kathy's 401(k) $45,012 $51,080 Auto loan-Kathy $15,432 $10,436 Auto loan payment $5,377 Auto Maintenance $800 Auto - Kathy $20,000 $18,000 Auto - Eric $5,750 $5,175 Auto insurance premium $1,380 Credit card $5,460 $8,582 Credit card payment $1,800 Personal residence $452,000 $474,600 Mortgage $298,946 $289,281 Mortgage payment $27,339.50 Property tax $4,746 Home Owner's insurance premium $1,200 Life Insurance-Eric $820 Health insurance premium $3,250 Medical costs Clothing Entertainment Vacation Gasoline for autos Telephone Food Utilities Child care Furniture/Household items Jewelry Miscellaneous expense FICA taxes withheld Income taxes withheld $1,080 $7,800 $1,500 $6,500 $1,200 $1,000 $9,800 $5,200 $6,000 $36,000 $5,025 $34,000 $5,650 $5,000 $13.827.38 $39,123 Additional information: 1. General inflation rate is expected to be 3% and education inflation rate is expected to be 6%. 2. Medical expense is expected to increase by 10%. 3. Home value is expected to appreciate by 5% 4. Eric and Kathy assume their salary will increase at the same rate as the general inflation rate. 5. Health and home insurance premiums are expected to increase by 10% annually for the next three years. 6. The APR on their Credit cards is 18%. They make minimum payment of $150 monthly on their credit cards. 7. They bought their house in 2004 for $400,000 with a loan of $380,000 financed over 30 years at 6%. Current 15-year conforming mortgage rate is 3.96%; 30-year conforming mortgage rate is 4.56%. Refinancing closing costs are 3% of the amount mortgaged and could be included in the mortgage or paid directly. 8. Eric and Kathy paid $6,000 for child care (Clark, Joshua's summer camp and Lisa's pre school) in 2017 and expect the child care expenses to increase at the same rate as education inflation. 9. During 2017, Eric contributed $5,000 to childcare FSA and $1,000 to health care FSA. 10. Though the new tax law will take into effect in 2018, Eric and Kathy expect their average tax rate in 2018 will still be the same as for year 2017. Section 5: Risk Management Analysis (13 points) Using the following information, please evaluate your client's risk management portfolio and make recommendations 1. Eric participates in his employer sponsored HMO health insurance plan and all family members are covered by this plan. The plan has no deductibles, 80/20 coinsurance for in-net work and 60/40 for out of network, and has a $3,000 maximum annual out-of-pocket limit. His portion of premium for the family coverage is $3,000 per year and is paid through payroll deduction. 2. Eric also participates in his employer sponsored dental insurance. His portion of premium for the family coverage is $250 per year. 3. Eric and Kathy do not have long-term disability insurance. 4. Eric purchased a 30-year term S1 million life insurance 10 years ago when their first child Clark was born. His life insurance annual premium is $820. Eric also has employer sponsored $250,000 life insurance and his employer pays the premium. Kathy only has employer sponsored $50,000 life insurance and her employer pays the premium. Kathy does not smoke and is overall healthy. 5. They have a HO-3 policy (replacement value and open perils endorsement) with a $1,000 deductible, a dwelling value of $500,000 and $100,000 liability coverage per occurrence. Their current premium is $1,200. 6. Their current auto insurance coverage for two cars is as following Liability Medical Payments Physical Damage, Own Car Uninsured Motorist Collision Deductible Comprehensive Deductible Annual Premium $100,000/$300,000/$50,000 no coverage Actual Cash Value $50,000/accident $100 $250 $1,380 7. You called several insurance agents and collected the following information: 1) Annual premium for a 30-year term half million life insurance for a non-smoker, healthy woman age 37 is quoted at $685. 2) Annual premium for a 20-year term $1 million life insurance for a non-smoker, healthy women age 37 is quoted at $812. 3) $1 million umbrella policy is quoted at $200 for 2018, but requires underlying $300,000/$500,000/$100,000 liability on auto insurance. 4) Eric and Kathy's auto insurance company quoted them an annual premium of $1,560 for 2018 if they want to increase liability coverage to $300,000/$500,000/$100,000: Eric Williams (age 39) and Kathy Williams (age 37) are married with three children. Eric is a CPA working at an accounting firm with an annual salary of $115,000. Kathy is client relationship manager at a local bank with an annual salary of $75,000. Following are financial data you collected from Eric and Kathy. Balance as of Balance as of Income/Expense 12/31/16 . 12/31/17 for year 2017 Savings Account $17,000 $19,500 Checking Account $5,000 $8,500 Investment Account $86,649 $93,579 Eric's 401(k) contribution $6,900 Eric's 401(k) $57,465 $66,062 Kathy's 401(k) contribution $3,750 Kathy's 401(k) $45,012 $51,080 Auto loan-Kathy $15,432 $10,436 Auto loan payment $5,377 Auto Maintenance $800 Auto - Kathy $20,000 $18,000 Auto - Eric $5,750 $5,175 Auto insurance premium $1,380 Credit card $5,460 $8,582 Credit card payment $1,800 Personal residence $452,000 $474,600 Mortgage $298,946 $289,281 Mortgage payment $27,339.50 Property tax $4,746 Home Owner's insurance premium $1,200 Life Insurance-Eric $820 Health insurance premium $3,250 Medical costs Clothing Entertainment Vacation Gasoline for autos Telephone Food Utilities Child care Furniture/Household items Jewelry Miscellaneous expense FICA taxes withheld Income taxes withheld $1,080 $7,800 $1,500 $6,500 $1,200 $1,000 $9,800 $5,200 $6,000 $36,000 $5,025 $34,000 $5,650 $5,000 $13.827.38 $39,123 Additional information: 1. General inflation rate is expected to be 3% and education inflation rate is expected to be 6%. 2. Medical expense is expected to increase by 10%. 3. Home value is expected to appreciate by 5% 4. Eric and Kathy assume their salary will increase at the same rate as the general inflation rate. 5. Health and home insurance premiums are expected to increase by 10% annually for the next three years. 6. The APR on their Credit cards is 18%. They make minimum payment of $150 monthly on their credit cards. 7. They bought their house in 2004 for $400,000 with a loan of $380,000 financed over 30 years at 6%. Current 15-year conforming mortgage rate is 3.96%; 30-year conforming mortgage rate is 4.56%. Refinancing closing costs are 3% of the amount mortgaged and could be included in the mortgage or paid directly. 8. Eric and Kathy paid $6,000 for child care (Clark, Joshua's summer camp and Lisa's pre school) in 2017 and expect the child care expenses to increase at the same rate as education inflation. 9. During 2017, Eric contributed $5,000 to childcare FSA and $1,000 to health care FSA. 10. Though the new tax law will take into effect in 2018, Eric and Kathy expect their average tax rate in 2018 will still be the same as for year 2017