Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Marc is 32 and married to Estella, who is 30. Estella is a stay-at-home mom to their two children, ages 1 and 4. They currently
Marc is 32 and married to Estella, who is 30. Estella is a stay-at-home mom to their two children, ages 1 and 4. They currently live on Marc's salary of $110,000 (after taxes) that just about meets their household expenses. They would like to make sure that if Marc dies, they replace his income for 17 years, which would match their mortgage maturity and their kids would be well off to college; fund the children's college education ($300,000); establish a retirement fund for Estella ($250,000) to supplement Marc's Social Security retirement benefits; cover funeral costs ($10,000); and establish a 3-month emergency fund. If Estella dies, they want to have enough insurance to be able to pay for child care ($36,000 per year) and housekeeping services ($12,000 per year) for 17 years, to establish an emergency fund, and for funeral costs. They have the following financials: Marc's employer provides a year's salary life insurance. Family is eligible for Social Security survivor benefits of $55,000 if Marc dies. Household expenses would be 20% lower if either parent dies. Current savings and investments of $23,000. Using the financial needs approach, how much life insurance would you recommend? O $905,500 on Marc; $778,500 on Estella O $1,015,500 on Marc; $756,500 on Estella O $487,500 on Marc; $340,500 on Estella O $1,063,500 on Marc; $708,500 on Estella
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started