SCENERIO: Homer and Marge are Married, both 40 years of age with two children (ages 10 and 12). They have some debts including:

• Credit cards = $3,000
• Car loans = $20,000
• Home mortgage= $125,000

Their home is worth $175,000 and they have a net worth of $75,000. They are both employed. Homer makes $40,000 per year at the local nuclear power plant while Marge hauls in $45,000 in the hair-styling business.

QUESTION:

• What type of life insurance policy would you recommend for Marge? Why?
• How much coverage should she have? (Explain which method you used to calculate the coverage needed and why.)