Question
Q: Solomia owns her own twobedroom unit, which is valued at $685,000, against which she holds a 25-year mortgage of $535,000. Her annual mortgage repayments
Q: Solomia owns her own twobedroom unit, which is valued at $685,000, against which she holds a 25-year mortgage of $535,000. Her annual mortgage repayments are $22,620. She has furniture and other personal effects valued at $115,000. Her other assets are $12,750 which she holds in a transaction account at her bank, earning her $14.25 in interest for the year; a term deposit of $10,000 earning 0.85 per cent per year; and a superannuation account balance of $36,150, to which she contributes an additional $5,650 per year. However, this does not provide Solomia with life insurance or TPD cover. Given her excellent health, and knowledge of the fitness and therapy industries, Solomia has put off consideration of this form of cover believing it is better suited to those of more advanced age.
What are some behavioural biases that Solomia may be displaying in making her insurance decisions?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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