Jeremy and Jenny Jenkin, are both aged 35; married with 3 small children. Julie age 10, June age 8, and Justine age 3. The Jenkins want to ensure that they have adequate resources in place to complete their estate plans, should Jeremy pass away prematurely. Consider their current resources and expressed needs as noted below. What is an appropriate amount of life insurance they should consider? Needs Pay final expenses of $18,000 Repay credit card debt of $12,000 Repay mortgage on the family home of $280,000 Repay car loan of $15,000 Establish an educational fund of $50,000 for the children Charitable bequest of $20,000 Current Resources / Assets Cash in savings account of $5,000. Group insurance on Jeremys life of $75,000 Spousal group insurance on Jennys life of $40,000 If Jeremy passes away, Jenny will start to work as a teacher and will earn $55,000 per year. She will participate in the teachers pension plan until age 60, at which time her pension will be approximately $24,000 per year. Objectives The Jenkins want to maintain the family income at $90,000 per year while the children are minors (18), then $65,000 until Jennys retirement at age 60, and $50,000 thereafter. They are assuming Jenny will live to age 90. For planning purposes, they have chosen to disregard any provisions for government sponsored benefits arising from a premature death, and any tax deductions for Jenny. Notes: To simplify the capital needs analysis, ignore inflation and assume a 4% rate of return can be earned on any monies invested to generate income.

Assume that Jeremy has just died. Taking into considering the Jenkins current resources and expressed needs, answer each of the following questions and show your calculations, where appropriate. NOTE: This is an individual assignment. You confirm that the report you submit is based on your individual effort. Your assignment will be screened through the SafeAssign plagiarism module and is subject to Seneca College's Academic Integrity policy.

1. What is the immediate net cash position after paying final expenses? 2. If the Jenkins were to also repay their debts and cover other lump-sum needs, how much additional liquid cash would be required? 3. With respect to their long-term income needs, what is the annual income shortfall in each of the periods identified? Hint: Refer to objectives above. 4. It has been determined that on average there will be a shortfall of $2,000 per month in ongoing income to meet all the long-term income needs. The Jenkins do not want to use up any capital, only the earnings on that capital, to cover the shortfall. How much capital would be required to cover this shortfall if they could get an investment return of 4% per year on the capital? 5. Using the information from the questions 1, 2 and 4, what is the additional amount of insurance on Jeremys life that would be required to meet the familys objectives? 6. What type of insurance and in what amounts would you recommend? Provide an explanation to justify each of your recommendations.