Sharon Epstein is a 72-year-old widow who has recently been diagnosed with Alzheimers disease. She has limited financial assets of her own and has been living with her daughter Miriam. Sharons only income is $850 a month in Social Security survivors benefits.

Miriam wants to make sure her mother will be taken care of if Miriam should die. Miriam, 40, is single and earns $55,000 a year as a human resources manager for a small manufacturing firm. She owns a condominium with a current market value of $100,000 and has a $70,000 mortgage. Other debts include a $5,000 auto loan and $500 in various credit card balances. Her 401(k) plan has a current balance of $24,500, and she keeps $7,500 in a money market account for emergencies.

After talking with her mothers doctor, Miriam believes that her mother will be able to continue living with Miriam for approximately 3 more years. She estimates that her mother would need about $2,000 a month to cover her living expenses and medical costs during this time. After that, Miriams mother will probably need nursing home care.

Miriam calls several local nursing homes and finds that it will cost about $5,000 a month when her mother enters a nursing home. Her mothers doctor says it is difficult to estimate her mothers life expectancy but indicates that with proper care some Alzheimers patients can live 10 or more years after diagnosis. Miriam has decided to plan for 3 years of independent living (as mentioned above) followed by 10 years of nursing home care.

Miriam also estimates that her own personal final expenses would be around $5,000, and she would like to provide a $25,000 contingency fund that would be used to pay a trusted friend to supervise her mothers care if Miriam were no longer alive.

Use the worksheet below to calculate Miriam's total life insurance requirements.