Assignment: Chapter $08$ Insuring Your Life

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Edison and Hilary Klein have completed Step $1$ of their needs analysis worksheet and determined that they need $$2,418,000$ to maintain the projected lifestyle of Hilary $($age $38)$ and their two children $($ages $8$ and $10)$ in the event of Edison's $($the primary earner's$)$ death. The Kleins also have certain financial resources available after Edison's death, however, so their life insurance needs are lower than this amount.

If Edison dies, Hilary will be eligible to receive Social Security survivors' benefits$-$approximately $$3,800$ a month $($ $$45,600$ a year$)$ until the youngest child graduates from high school in $10$ years. After the children leave home, Hilary will be able to work full$-$time and earn an estimated $$38,000$ a year $($after taxes$)$ until she retires at age $65.$ After Hilary turns $65,$ she'll receive approximately $$3,200$ a month $($ $$38,400$ a year$)$ from her own Social Security and retirement benefits. The life expectancy for a woman within Hilary's demographic is $87.$ The couple has also saved $$60,000$ in a mutual fund, and Edison's employer provides him a $$100,000$ life insurance policy.

Using this information, complete Step $2$ of the needs analysis worksheet to estimate their total financial resources available after death. $($Note: If the value of a certain entry is zero, be sure to enter $"0"$ to receive credit.$)$

Life Insurance Needs Analysis Worksheet $($Part $2)$

Step $2$: Financial Resources Available After Death

$\backslash$table$[[,$Period $1,$Period $2,$Period $3,],[$a$.$ Annual Social Security survivors' benefits,$$45,600,$$$0,$$$0,],[$b$.$ Surviving spouse's annual income,$$0,$$$,$$$0,],[$c$.$ Other annual pensions and Social Security benefits,$$0,$$$0,$$$38,400,],[$d$.$ Annual income $(1a+1b+1c),$$$45,600,$$$,$$$,],[$e$.$ Number of years in time period,$10,17,22,],[$f$.$ Total period income $(1d1e),$$$456,000,$$$,$$$,],[$g$.$ Total income,,,,$$1,946,800$