c. What type of life insurance policy would you recommend that Daniella purchase? (Select the best choice below.) she needs to find an affordable policy. needs to find an affordable policy. she needs to find an affordable policy. she needs to find an affordable policy. d. What would happen to Daniella's group life insurance if she leaves her present job? (Select the best choice below.) insurance protection. avoid the greater risk of death occurring with no life insurance protection. money than necessary. e. What could happen to the Martinezes' children if Daniella or Jorge should die without adequate life insurance coverage? (Select the best choice below.) (e.g., a college education). This could cause a drop in the children's standard of living. (e.g., a college education). This would improve the children's standard of living. for in full through Social Security Survivors' Benefits. This could cause a drop in the children's standard of living, until they went to college. \begin{tabular}{ll} \hline \multicolumn{2}{c}{ Estimated Expenses } \\ \hline Immediate needs at death & $26,000 \\ Outstanding debt (including mortgage repayment) & $92,000 \\ Transitional funds for Jorge to expand his business to fully support the family & $16,000 \\ College expenses for their two children & $204,000 \\ \hline \end{tabular} In step 9 , the total cash from current policies is $ (Type a whole number.) The amount in retirement savings and investments is q (Type a whole number.) The amount in other assets is $ (Type a whole number.) The total assets from step 9 is 9 (Type a whole number.) In step 10 , it is determined that the amount of additional life insurance that should be purchased is $ (Round to the nearest dollar.) b. Should Jorge purchase an insurance policy? Why or why not? If so, what type of policy would you recommend for Wendy? (Select the best choice below.) pure insurance protection for Jorge at a relatively low cost. potential expense. Term insurance would provide pure insurance protection for Jorge at a relatively low cost. this potential expense. Term insurance would provide pure insurance protection for Jorge at a relatively low cost. cover this potential expense. Term insurance would provide pure insurance protection for Jorge at a relatively low cost. f. Should the Martinezes name the children as life insurance beneficiaries? (Select the best choice below.) surviving spouse or guardian(s) for the children. should be set up to deposit equal amounts in each child's bank account, and send a letter to either the surviving spouse or guardian(s) stating it has been done. policy should be set up to provide income to whoever will raise the children in the event of premature death, either the surviving spouse or guardian(s) for the children. D. Yes. Minor children generally can be paid life insurance proceeds directly. The policy should be set up to provide the same amount of income to each of the children. g. Which life insurance riders might the Martinezes select when purchasing a policy? Life insurance riders the Martinezes might select when purchasing a policy are: (Select all the choices that apply.) A. a lump-sum settlement rider. B. a cost of living adjustment (COLA) rider. C. a change of policy rider. D. a waiver of premium for disability rider. E. a living benefits rider. F. a guaranteed insurability rider. reeducate themselves for life insurance shopping? (Select the best choice below.) A. Given that the children provide income, life insurance would be necessary. The primary needs are adequate income replacement in the event of any family member's death. enough to the household income to warrant insuring them. a. What method should the Martinezes use to determine how much insurance they need? In Step 1 of estimating their life insurance needs, the amount that the Martinezes estimate will be needed for immediate needs, should Daniella die, is $ (Type a whole number.) In Step 2, the amount that the Martinezes estimate will be needed to eliminate debt is $ (Type a whole number.) In Step 3, the amount that the Martinezes estimate will be needed for immediate transitional funds is $ (Type a whole number.) In step 4, dependency expenses, the current household expenses are $ (Round to the nearest dollar.) For the Martinezes, the deceased's expenses would be $ (Round to the nearest dollar.) The spousal income, or Jorge's projected income after his business expansion, is $ (Type a whole number.) The amount anticipated from Social Security Survivors' Benefits is $ (Type a whole number.) Hint: Assume the same amount will be received from Social Security until the youngest child turns 18 years old. The amount anticipated from pension benefits is g (Type a whole number.) The income to be replaced until the children are self-supporting is q (Round to the nearest dollar.) The total dependency expenses, or money in today's dollars needed for dependency expenses, is q (Round to the nearest dollar.) In step 5 , the desired amount for spousal income, after the children are self-supporting, is $ (Round to the nearest dollar.) The total spousal life income, or money in today's dollars needed to provide desired spousal income, is $ (Round to the nearest dollar.) In step 6 , the total educational expenses for the children is q (Type a whole number.) In step 7 , the additional desired annual income at retirement is $ (Round to the nearest dollar.) The total retirement income, or money in today's dollars needed to provide for desired retirement income, is $ (Round to the nearest dollar.) In step 8 , the total funds needed in today's dollars to cover needs is $ (Round to the nearest dollar.) doesn't hurt to have insurance on the children. 9: Mind Games, Your Financial Personality, and Your Money affect their decision to purchase life insurance? (Select the best choice below.) term insurance would provide immediate protection. The savings, albeit important, will accumulate a sufficient balance to protect the family in case of premature death. goals than contributing to Daniella's 401(k) plan, because the 401(k) plan money would not be given to the family in case of Daniella's premature death. may agree that the mental account of savings is a more important goal and that they are young and do not need to be concerned with premature death. Jorge and Daniella Martinez, 30 and 35, are considering the purchase of life insurance. Jorge doesn't have any coverag whereas Daniella has a $148,000 group policy at work. The Martinez have two young children, ages 3 and 5 . Jorge earns $29,000 annually from a part-time home-based business. Daniella's annual salary is $58,000. From their income, they save $7,500 a year. The rest goes for expenses. The couple estimates that the children will be financially dependent, except for college costs, for about another 15 years. Once the children are in college, Jorge assumes their annual expenses will be $61,972. In preparation for a visit with their insurance agent, the Martinezes have estimated the following expenses if Daniella were to die: They also anticipate, should Daniella die, Jorge will receive $7,900 a year in Social Security survivor's benefits until the youngest child turns 18 and $5,000 annually in pension benefits until Jorge turns 80 . Jorge projects his gross annual income to be $40,000 after his business expansion. Once the children are self-supporting, Jorge wants to plan spousal life income-that is, funds to make up the difference between his income and pension benefits and his expenses-for 15 more years, from age 45 to 60 . Lastly, he wants to plan on $28,000 a year in retirement income for another 20 years, from age 60 to 80 . He anticipates receiving a 5 percent after-tax, after-inflation return on their investments. c. What type of life insurance policy would you recommend that Daniella purchase? (Select the best choice below.) she needs to find an affordable policy. needs to find an affordable policy. she needs to find an affordable policy. she needs to find an affordable policy. d. What would happen to Daniella's group life insurance if she leaves her present job? (Select the best choice below.) insurance protection. avoid the greater risk of death occurring with no life insurance protection. money than necessary. e. What could happen to the Martinezes' children if Daniella or Jorge should die without adequate life insurance coverage? (Select the best choice below.) (e.g., a college education). This could cause a drop in the children's standard of living. (e.g., a college education). This would improve the children's standard of living. for in full through Social Security Survivors' Benefits. This could cause a drop in the children's standard of living, until they went to college. \begin{tabular}{ll} \hline \multicolumn{2}{c}{ Estimated Expenses } \\ \hline Immediate needs at death & $26,000 \\ Outstanding debt (including mortgage repayment) & $92,000 \\ Transitional funds for Jorge to expand his business to fully support the family & $16,000 \\ College expenses for their two children & $204,000 \\ \hline \end{tabular} In step 9 , the total cash from current policies is $ (Type a whole number.) The amount in retirement savings and investments is q (Type a whole number.) The amount in other assets is $ (Type a whole number.) The total assets from step 9 is 9 (Type a whole number.) In step 10 , it is determined that the amount of additional life insurance that should be purchased is $ (Round to the nearest dollar.) b. Should Jorge purchase an insurance policy? Why or why not? If so, what type of policy would you recommend for Wendy? (Select the best choice below.) pure insurance protection for Jorge at a relatively low cost. potential expense. Term insurance would provide pure insurance protection for Jorge at a relatively low cost. this potential expense. Term insurance would provide pure insurance protection for Jorge at a relatively low cost. cover this potential expense. Term insurance would provide pure insurance protection for Jorge at a relatively low cost. f. Should the Martinezes name the children as life insurance beneficiaries? (Select the best choice below.) surviving spouse or guardian(s) for the children. should be set up to deposit equal amounts in each child's bank account, and send a letter to either the surviving spouse or guardian(s) stating it has been done. policy should be set up to provide income to whoever will raise the children in the event of premature death, either the surviving spouse or guardian(s) for the children. D. Yes. Minor children generally can be paid life insurance proceeds directly. The policy should be set up to provide the same amount of income to each of the children. g. Which life insurance riders might the Martinezes select when purchasing a policy? Life insurance riders the Martinezes might select when purchasing a policy are: (Select all the choices that apply.) A. a lump-sum settlement rider. B. a cost of living adjustment (COLA) rider. C. a change of policy rider. D. a waiver of premium for disability rider. E. a living benefits rider. F. a guaranteed insurability rider. reeducate themselves for life insurance shopping? (Select the best choice below.) A. Given that the children provide income, life insurance would be necessary. The primary needs are adequate income replacement in the event of any family member's death. enough to the household income to warrant insuring them. a. What method should the Martinezes use to determine how much insurance they need? In Step 1 of estimating their life insurance needs, the amount that the Martinezes estimate will be needed for immediate needs, should Daniella die, is $ (Type a whole number.) In Step 2, the amount that the Martinezes estimate will be needed to eliminate debt is $ (Type a whole number.) In Step 3, the amount that the Martinezes estimate will be needed for immediate transitional funds is $ (Type a whole number.) In step 4, dependency expenses, the current household expenses are $ (Round to the nearest dollar.) For the Martinezes, the deceased's expenses would be $ (Round to the nearest dollar.) The spousal income, or Jorge's projected income after his business expansion, is $ (Type a whole number.) The amount anticipated from Social Security Survivors' Benefits is $ (Type a whole number.) Hint: Assume the same amount will be received from Social Security until the youngest child turns 18 years old. The amount anticipated from pension benefits is g (Type a whole number.) The income to be replaced until the children are self-supporting is q (Round to the nearest dollar.) The total dependency expenses, or money in today's dollars needed for dependency expenses, is q (Round to the nearest dollar.) In step 5 , the desired amount for spousal income, after the children are self-supporting, is $ (Round to the nearest dollar.) The total spousal life income, or money in today's dollars needed to provide desired spousal income, is $ (Round to the nearest dollar.) In step 6 , the total educational expenses for the children is q (Type a whole number.) In step 7 , the additional desired annual income at retirement is $ (Round to the nearest dollar.) The total retirement income, or money in today's dollars needed to provide for desired retirement income, is $ (Round to the nearest dollar.) In step 8 , the total funds needed in today's dollars to cover needs is $ (Round to the nearest dollar.) doesn't hurt to have insurance on the children. 9: Mind Games, Your Financial Personality, and Your Money affect their decision to purchase life insurance? (Select the best choice below.) term insurance would provide immediate protection. The savings, albeit important, will accumulate a sufficient balance to protect the family in case of premature death. goals than contributing to Daniella's 401(k) plan, because the 401(k) plan money would not be given to the family in case of Daniella's premature death. may agree that the mental account of savings is a more important goal and that they are young and do not need to be concerned with premature death. Jorge and Daniella Martinez, 30 and 35, are considering the purchase of life insurance. Jorge doesn't have any coverag whereas Daniella has a $148,000 group policy at work. The Martinez have two young children, ages 3 and 5 . Jorge earns $29,000 annually from a part-time home-based business. Daniella's annual salary is $58,000. From their income, they save $7,500 a year. The rest goes for expenses. The couple estimates that the children will be financially dependent, except for college costs, for about another 15 years. Once the children are in college, Jorge assumes their annual expenses will be $61,972. In preparation for a visit with their insurance agent, the Martinezes have estimated the following expenses if Daniella were to die: They also anticipate, should Daniella die, Jorge will receive $7,900 a year in Social Security survivor's benefits until the youngest child turns 18 and $5,000 annually in pension benefits until Jorge turns 80 . Jorge projects his gross annual income to be $40,000 after his business expansion. Once the children are self-supporting, Jorge wants to plan spousal life income-that is, funds to make up the difference between his income and pension benefits and his expenses-for 15 more years, from age 45 to 60 . Lastly, he wants to plan on $28,000 a year in retirement income for another 20 years, from age 60 to 80 . He anticipates receiving a 5 percent after-tax, after-inflation return on their investments