Hilliard (age 38) and Mary (age 35) are married, and have one child, Tom (age 5). Hilliard carns $50,000 annually. Mary earns $40,000 annually. Currently, they have a mortgage loan with an outstanding balance of $ 120,000 and a credit card balance of $8,000. Hilliard and Mary are considering buying life insurance to protect his family.

(a) Who, Hilliard or Mary, shall get life insurance? (2 marks)

(b) If they decide to buy Mary a 15-year term life insurance (e.g, covering the family for I5 years until the child becomes independent), what would be the proper amount of life insurance coverage using the carnings multiplier methods? Assume that the applicable after-tax and inflation return is 5%, and a self-supporting ratio of Mary is 25%. (4 marks)

(c) What information will you gather if you use the needs approach to determine the life insurance coverage? (4 marks)