Capital Needs Analysis

Sam is a stay-at-home dad. He and his husband Mark have 2 young children. Mark is the sole source of income for the family. Mark has $100,000 in group life insurance through his employer. They have a $750,000 home with an outstanding mortgage of $590,000. The family expenses are $8,000 per month. Sam and Mark are planning to save up $30,000 for each childs education, but currently only have a total of $2,000 saved for education at this time. Assume a funeral will cost $18,000. Assume an interest rate of 4% compounded annually. Sam is now 34 years-old. In the event of Marks death, Sam does not plan to return to work until the children are in high school. They have estimated that they would still need an income of $6000 per month. How much life insurance should they buy on Marks life?

1. If Sam needs the income for life?

2. If Sam needs the income to age 45?