Risk Management

Please answer one of the following:

1.George and Mary Kays are very excited over thenews that they are to be parents. Sincetheir graduation from college three years ago, they have purchased a new houseand a new car. George is rapidly movingup within the company as special projects engineer. In anticipation of the new arrival(s) Georgeis considering the purchase of additional life insurance. He feels that he needs at least $250,000 incoverage, but his budget for life insurance is somewhat limited.

a.As Georges agent, advise him as to the type(s)of life insurance that seem(s) most appropriate for his situation.

b.George indicates to you that his financialsituation will change in five years when he receives a large payment from hisuncles estate. In what way would thissituation affect the type of life insurance you recommend to George?

2. Your neighbor, Walt, recently approached youas you were on your way to work as an agent of Lotze Life InsuranceCompany. He said, Say - you know whatbothers me about that ordinary/savings type of policy your company sells? Its a bad deal. If I die tomorrow your company pays the faceamount but you keep all the savings that belong to me now! I dont think that is fair! You response was, Walt, there are other waysto look at that. Lets make anappointment for tomorrow, and Ill show you how to have your cake and eat it,too.

a.What did Walt mean by his first question?

b.What solution(s) did you have in mind?