Purpose

To test your knowledge, understanding, and application to develop a risk management and insurance plan.

Overview

This is a comprehensive case, which covers all you have learned regarding insurance planning. As with American many families, the Berrys have ambitious financial goals but lack the financial savvy to achieve them. They have sought advice from you,the financial planner, to assist them in achieving their goals. The family has many needs and it is your task to assist them in prioritizing and identifying strategies to meet these needs and their goals. Addressing their insurance needs is your main focus, however, you will find it difficult to address insurance needs without taking the other needs into consideration. In addition to insurance planning, feel free to elaborate on other financial planning issues you deem important.

Action Items

1. Use the attachedBerry caseas the basis for this comprehensive case.
2. Life Coverage:Based on the capital needs approach, evaluate the adequacy of Rasp's life insurance coverage amount if he were to die today. Make sure to convert the amount of capital needed today to provide the future stream of income to an equivalent present value amount. Is Rasp adequately covered? If not, what are your insurance recommendations?
3. Disability Coverage:A short term or long-term disability due to illness or injury can devastate your financial plans. At a time when you can no longer work for a living, your expenses may actually increase while your income decreases, forcing you to deplete funds that were accumulating for your financial independence in your retirement years. Thus, careful planning should be made to assure that you have adequate coverage in the event of disability.
4. Calculate the income needed and the income available when the following two situations occur: (a) if Rasp becomes disabled and (b) if Holly becomes disabled.
5. Answer this question: Is there a shortage in their disability coverage?
6. Long-term Care:Calculate the total potential long-term care costs in today's dollars for the Berrys. Factors you should consider in this long-term care analysis include:
7. estimation of monthly care cost,
8. number of months of care needed,
9. assumed inflation rate,
10. years until long-term care starts, etc.