Ben is living in Kuala Lumpur with his 10 years old son. His wife has passed away a few years ago. His loss has alerted him on the importance of obtaining a risk management plan, especially for those dependent caused by premature death. Taking care of his sons financial well-being has become his top priority.

When his wife passed away, Ben has to face all the financial pressure especially medical treatment spent. The insurance claim of RM30,000 from his wife is barely enough to cover the medical expenses and funeral expenses.

Ben is a senior software engineer for a public listed company in Ipoh, Perak. His current annual income inclusive of bonuses and fixed allowances is RM120,000. The employer provides a general group life insurance from ABC Insurance Bhd. The sum insured amount will be triple of his annual income.

Besides his contribution to the Employees Provident Fund (EPF) and Private Retirement Scheme (PRS), he also has allocated some money in the education funds through SSPN for his son upon enrolment to further study.

Bens has the following financial needs and objectives if he were to face premature death:

• Estimated funeral costs RM30,000
• Medical bills RM30,000
• Lawyers fees RM5,000
• Income support for his son. RM1,300 monthly for 8 years
• Housing loan outstanding RM280,000
• Car loan and credit card debts RM50,000
• Education funds (Engineer Local) RM180,000
• Amanah Saham Malaysia RM10,000

• Fixed Deposit RM50,000
• SSPN RM10,000
• Private Retirement Scheme RM30,000
• EPF Balance RM185,000
• Individual life insurance (sum insured) RM50,000
• Group life insurance (sum insured) RM240,000

1. Based on the information above, you are required to estimate the additional insurance need by using the human life value approach at the discount rate of 5 percent, if Ben allocates 60 percent of his earnings for his son until he reaches 18 years old. (3 marks)

2. Measure the amount of insurance need by using the needs approach.

(13 marks)

3. If the estimated Life Insurance survivor benefits from existing group life insurance are paying RM650 monthly to Bens son until he is 18 years old, Calculate the additional life insurance needs. (4 marks)