Scenario:

Bob and Judy are your new clients. Their lives have been changing with a buying a new home 5 years ago along with starting their family. Bob has a stable career while Judy has decided to build her own business at home while caring for their children.

Bob and Judy are both 40 years old, and own their own home with a market value of $350,000, replacement cost of $400,000 and a $250,000 mortgage to be repaid over the next 25 years. Their monthly payment including taxes and insurance is $1,400. Bob's gross income $80,000 a year as a systems analyst, and Judy is a bookkeeper grossing $50,000 from her own S Corporation based in their home. She has about $5,000 in business expenses a year.

They have two children aged 3 and 5, for whom they have been contributing $300 per month since their birth to 529 plans to fund their future education. They are also just began investing $1,500 per month into Bob's 401k to save for their retirement. They hope the 529 and retirement funding are adequate to meet their desires.

In addition to their mortgage they have other debt of $40,000, with monthly payments of $800. After paying all of these bills, they do not have any money left over.

They do have an emergency fund of $10,000.

Current insurance in place:

Auto Insurance:

• Liability limits of 25/50/100
• Comprehensive and collision deductibles of $50

Homeowners Insurance:

• Coverage A limit of $250,000 to cover the mortgage
• Personal liability limit of $50,000
• Deductible of $100

Life insurance:

• Bob -
• $80,000 (1X salary) from his employer, not portable
• $200,000 term policy expiring in 9 years
• Judy -
• None

Disability Insurance:

• Bob - 60% income replacement, any occupation, employer paid
• Judy - None

Health Insurance:

• Bob, Judy and their children are covered by Bob's employer plan, annual out-of-pocket maximum is $3,000

Assume these are the only insurances they have in place. Also assume a 20% reduction in monthly expenses should either Bob or Judy die.

Instructions

1. Analyze their current insurances for adequacy. What recommendations would you make to these current policies and why?
2. What additional insurances would you recommend and why?
3. What future steps would you recommend they take with their insurance and why?

No need for APA formatting but grammar and spelling are important. Use double spacing, Times New Roman 12pt font and 1" margins.