Home and Automobile Insurance

Newlyweds Jamie Lee and Ross have had several milestones in the past year. They are newlyweds, recently purchased their first home and now have twins on the way!

Jamie Lee and Ross have to seriously consider their insurance needs. A family, a home and now babies on the way, they need to develop a risk management plan to help them should an unexpected event arise.

Current Financial Situation:

Assets (Jamie Lee and Ross combined):

Checking account: $4,300 4900

Savings Account: $22,200 22800

Emergency Fund savings account: $20,500 21100

IRA balance: $26,000 26600

Car: $10,000 (Jamie Lee) and $18,000 (Ross)

Liabilities (Jamie Lee and Ross combined):

Student loan balance: $0

Credit Card Balance: $2,000

Car Loans: $6,000

Income:

Jamie Lee: $50,000 gross income ($37,500 net income after taxes)

Ross: $75,000 gross income ($64,000 net income after taxes)

Monthly Expenses (combined):

Mortgage: $1,252

Property Taxes and Insurance: $500

Utilities: $195

Food: $400

Gas/Maintenance: $275

Credit Card Payment: $250

Car Loan Payment: $289

Entertainment: $300

Questions:

1. Based on their current life status, what are some of the goals Jamie Lee and Ross should set to achieve when developing their insurance plan?

2. What four questions should Jamie Lee and Ross ask themselves as they develop the risk management plan?

3. Once Jamie Lee and Ross put their insurance plan in to action, what should they do to maintain their plan?

4. Jamie and Ross decided to conduct a check-up on their homeowners insurance policy. They noticed that they had omitted covering Jamie Lees diamond wedding band set from their policy. What if it got lost or stolen? It was a major purchase and beside the emotional value, the cost to replace the diamond jewelry would be very high.

Focus on Personal Finance - 180 Day Option, 5th Edition