Life insurance needs for a young married couple. Veronica and Lars have been together for five years. They recently bought a home costing $110,000 using an $88,000 mortgage. They have no other debts. Lars earns $32,228 per year, and Veronica earns $44,531. Each has a retirement plan valued at approximately $10,000. Their only life insurance currently is employer-sponsored term life insurance which covers each of them at double their salary amount. They each would like to provide the other with support for at least five years if one of them should die. Assuming $13,125 in final expenses and $44,000 to help with mortgage debt, calculate the amount of life insurance they should purchase using the needs-based approach. (10 points) Factors Affecting Need Calculation Veronica's dollar amount Calculation Lars' dollar amount 1. Final expense needs N= 1/Y=3 N= 2. Income- I/Y=3 replacement needs (Multiply annual PV = CPT income by 75% for PMT = PMT) FV = 0 PV = CPT PMT = FV = 0 3. Readjustment- period needs 4. Debt-repayment needs 5. College-expense needs 6. Other special needs 7. Subtotal (Add #1-6) N= N= I/Y= I/Y= 8. Government benefits PV=CPT PV=CPT PMT= PMT= FV= FV= 9. Current insurance assets 10. Subtotal (Add #8-9) 11. Life insurance needed to purchase (Line 7 minus Line 10) Life insurance needs for a young married couple. Veronica and Lars have been together for five years. They recently bought a home costing $110,000 using an $88,000 mortgage. They have no other debts. Lars earns $32,228 per year, and Veronica earns $44,531. Each has a retirement plan valued at approximately $10,000. Their only life insurance currently is employer-sponsored term life insurance which covers each of them at double their salary amount. They each would like to provide the other with support for at least five years if one of them should die. Assuming $13,125 in final expenses and $44,000 to help with mortgage debt, calculate the amount of life insurance they should purchase using the needs-based approach. (10 points) Factors Affecting Need Calculation Veronica's dollar amount Calculation Lars' dollar amount 1. Final expense needs N= 1/Y=3 N= 2. Income- I/Y=3 replacement needs (Multiply annual PV = CPT income by 75% for PMT = PMT) FV = 0 PV = CPT PMT = FV = 0 3. Readjustment- period needs 4. Debt-repayment needs 5. College-expense needs 6. Other special needs 7. Subtotal (Add #1-6) N= N= I/Y= I/Y= 8. Government benefits PV=CPT PV=CPT PMT= PMT= FV= FV= 9. Current insurance assets 10. Subtotal (Add #8-9) 11. Life insurance needed to purchase (Line 7 minus Line 10)
