The James Family

Jim (age 26) and Jane (age 28) James are a married couple with 2 children, Sarah age 3 and Kyle age 2.

Jim works part time in sales and averages about $45,000 a year in income.

Jane is the Director of Operations for a small manufacturer of automotive parts. Her income is $155,000 per year.

To fully fund their childrens education goals today they would need to invest $70,248.19 .

If Jane were to pass away Jims estimated after tax income would be $40,500.

Health Care

The family has a PPO healthcare policy through Janes employer. The policy covers in network care which requires a copayment $15 for doctors visit. There are no deductibles or coinsurance for in-network care. Out of network care has a $500 deductible per person, 40% coinsurance responsibility, $5,000 maximum out of pocket per person and $12,000 OOP limit per family. The portion of the premium paid by the James family is $400 per month.

There is also an indemnity plan available. It has a $600 deductible, 20% coinsurance, $5,000 OOP max per person, and $13,000 OOP limit per family. This policy would cost the James $1,000 per month. Open enrollment starts next month and the James could change to this policy if they would like.

Disability

Jim does not have any disability insurance.

Jane has an own occupation disability policy that will replace 80% of her salary paid for by her employer.

Life Insurance (Just make recommendations for Jane here)

Jim has a $50,000 whole life policy he has had since he was 21. The premium is $500 per year. The cash value is $574. The surrender charge on the policy this year is $120, next year it is $60, and after that there are no longer any surrender charges that will apply if the policy is cancelled. Jim is the owner and the insured on the policy. His brother Jon James is listed as the beneficiary.

Jane has $50,000 of renewable term paid for by her employer. If Jane leaves her employer she can take the policy with her but will have to pay the premium, currently at $43 per year. Jim is listed as the beneficiary on the policy.

You will write your recommendations in a letter addressed to the James family based on your needs analysis and the information on the attached word document. Make sure to describe your reasons for the choices you have made and to describe major features of any insurance you have chosen (eg if you want Jane to buy another $100,000 in life insurance that is 10 year level term, ordinary whole life etc...). Essentially assume your clients have very little understanding of this area and use your letter as a way to communicate your recommendations and answer the questions you might suspect that they have about your recommendations. For example if you suggested they switch to an Indemnity Policy policy from a PPO you would explain why "We suggest you choose the Indemnity plan instead of the HMO plan because you want to keep the same family doctor you have had since you were a child, that is the only plan that will allow you to see that doctor, and you can both afford and are willing to pay the additional premiums and out of pocket costs associated with this plan versus your PPO. Realize that this could mean out of pocket costs up to $13,000 per year in the worst case scenario compared to the out of pocket costs of $15 per visit you would have with your PPO."

Wait you say, I read the case and it didn't say anything about the James family wanting to stay with their family doctor. Yes that is correct it did not. Feel free to make up items that are not included in the case to demonstrate why chose a particular option. The case intentionally has very little information. If these were actual clients and you were given this information you would ask additional questions. You can ask those questions and answer them as if you were the client.