Bob is 25. He and his wife, Sue (age 24), and they are expecting a newborn child. Both Bob and Sue are employed outside the home in full-time jobs but Sue intends to quit work to care for the child and they want to have another child when this one reaches age two. They just bought a home with a $200,000 mortgage. They want some insurance on Bob's life. They have asked your opinion as to whether they should buy a term policy or an ordinary life (cash value) policy. a. What are the differences between ordinary life insurance and term life insurance? b. What are the relative advantages and disadvantages of each type? c. What do you recommend they do? Why?
Bob is 25. He and his wife, Sue (age 24), and they are expecting a newborn child. Both Bob and Sue are employed outside the home in full-time jobs but Sue intends to quit work to care for the child and they want to have another child when this one reaches age two. They just bought a home with a $200,000 mortgage. They want some insurance on Bob's life. They have asked your opinion as to whether they should buy a term policy or an ordinary life (cash value) policy. a. What are the differences between ordinary life insurance and term life insurance? b. What are the relative advantages and disadvantages of each type? c. What do you recommend they do? Why?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:1. Bob is 25. He and his wife, Sue (age 24), and they are expecting a newborn child. Both Bob and
Sue are employed outside the home in full-time jobs but Sue intends to quit work to care for the
child and they want to have another child when this one reaches age two. They just bought a
home with a $200,000 mortgage. They want some insurance on Bob's life. They have asked
your opinion as to whether they should buy a term policy or an ordinary life (cash value) policy.
a. What are the differences between ordinary life insurance and term life insurance?
b. What are the relative advantages and disadvantages of each type?
C.
What do you recommend they do? Why?
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