BASED ON QUESTION YOU ANSWER BELOW, COMMENT ON 3 STUDENTS ANSWER!

Life insurance can be used to hedge against future risk of financial loss to others (beneficiaries) due to your (policy holder's) death. But do you need life insurance, and if you do, how much do you need? Read Chapter 12 and use the methods defined ("The Easy Method," The DINK Method," "The Non-Working Spouse Method," and/or "The Family Need Method) as appropriate to conduct your assessment. Determine whether you need life insurance. Then estimate how much, if any, life insurance you should carry. Should you use "term" or "whole life" to meet your needs? What other life insurance products could you use to meet your financial goals? What is the potential that your life insurance needs will change over your life? What would be a good strategy to deal with that change? Determine what would be best for you now and in the future.Did this process reveal something new to you?

1)

jermine

Life Insurance

There are a couple of major points that should be understood when considering life insurance. The first is that the likelihood of the insurer paying a claim is always increasing. Each day we all stride a day closer to our death and this is very important to realize with life insurance. This means that as we get older, the deal gets more expensive. The second biggest point to realize is that many calculations base the amount of life insurance needed solely with consideration of death. As the text explained this week, many policy types such as whole life allow the cash value to be utilized while living in the form of loans and withdrawals (Kapoor, Dlabay, Hughes, & Hart. 2017). In addition to death benefits there is cash value available to use while alive.

I think everyone who has someone they care about should have life insurance in some amount, at very least enough to cover funeral expenses. It's important to buy young as you will get the best rates. You need to think ahead and consider that you may have a family someday to protect. Buying only for the needs of today can leave a person unprepared for the future. As a younger man when I had the fitness to earn the elite or athlete class of a whole life policy (lowest premium) I was earning about $30,000 per year. The easy method for life insurance says a face amount should equal 70% of 7 years salary (Kapoor, Dlabay, Hughes, & Hart. 2017). This equates to a $147,000 policy. This is in alignment with the Multiple income method where income is simply multiplied by 5 to 8 years (Kapoor, Dlabay, Hughes, & Hart. 2017). This method claims that about $150,000 to $240,000 would have been the right amount of insurance.

I believe that $150,000 of universal life would have been a good choice. This is the most affordable amount at that income level that could truly protect a family by putting a serious dent in a mortgage should anything happen to me. Term insurance does not make sense, as life insurance is a savings and investment vehicle. Term insurance may be cheaper at the beginning of the contract, but eventually it runs out and a person can be left with no coverage. The universal aspect of the policy means that it can have a flexible amount of coverage and premium (Kapoor, Dlabay, Hughes, & Hart. 2017). This is attractive for the changing needs throughout life. In considering this process I realize that life insurance can be very meaningful, but is easy to forget. Thinking in the present is very easy to do while forgetting the needs of the future. Given that life insurance costs increase with age, it should be realized that there is opportunity in buying young.

2)

cameron

I have a life insurance policy of $400,000, with an additional amount of $100,000 if I die in a combat zone (plus a little more for military burial costs). Since I have a "typical" family I decided to use the family need method from the textbook to calculate my insurance needs. After comparing the total debts we have (mortgage, credit card and student loan) the remaining balance would be roughly $350,000. This amount would be enough to set my kids up until they are college aged without making my wife have to struggle month to month.

When I am ready to kick back and enjoy retirement, I will more than likely be switching to theincreasing my life insurance plan to a whole life policy of $1,000,000-simply because I want to make sure that my wife and kids will have absolutely zero debt once I'm gone, and at that point in life I don't want my wife to have to work unless she wants to. I know that I want my passing to be a blessing (as much as it can be I guess) and not a source of calamity for their financial futures.

Regardless of a person's stage in life, it is worth the time and energy to not only find an applicable life insurance policy, but to communicate with their family members any time there is a change made to the policy. This has become a hard lesson for my wife and mother in law over the last few months in the case of my father in law, a lesson I intend to learn from for the benefit of my family.

3)

terry

Life Insurance

Prelude: I went pretty deep on the Rent vs Buy post and was probably pretty annoying to a few. I'm going to cool my jets a little bit on this one.

First off, I'm gonna break the Forbes School of Business at Ashford University rule and quote Investopedia. (Never do with Dr. Kuznia or he will crush you). But Investopedia puts it very succinctly "The main purpose of life insurance is to provide the SAME standard of living for your family and cover your responsibilities in the event of your death (Murray, n.d.).

In other words, your death should not be like winning the lottery for your family! SO many spouses have killed spouses for insurance that most states have enacted "slayer statutes" (Sloan, 2010). So please people, don't let the insurance salesman talk you into an early death.

Next, be it the Easy Method, DINK or the Family Need Method-use a method. That is to say, don't start with the monthly premium and work backwards. (That's a car sales tactic)In Finance you calculate investment potential through several methods and then compare. Start with Easy Method (annual salary X percentage X years) to get in the ball park. Then if DINK or non-working don't apply, jump into the Family Need Method.

I like term life over whole life. I have SGLI with the military. It covers me until retirement when I should not be the primary means of support for anyone. If my kids are still getting an allowance from me when I'm 60, there's a problem.

I just took Risk Management & Insurance with Prof Keyes and we learned about some pretty creative life insurance policies with market returns potentially greater than whole life cash value. Still, I prefer to let investors invest and insurers insure. I don't order the hamburger at the seafood restaurant although I'm sure it's pretty good.

My method is term life, invest outside of insurance, assess my life insurance needs as life changes (capital purchases, kids move out, etc)