Doc White gave you a rough "rule of thumb" for determining your life insurance needs, based on your annual salaryAssume that Pete has an annual salary of $80,000. What is the rough range of life insurance coverage that Pete shouldhave according to this rule?A. $400,000 to $800,000OB. $400,000 to $480,000OC. $160,000 to $480,000OD. $160,000 to $800,000

Doc White’s rule of thumb is that insurance coverage should be at least 5 to 10 times of annual…

Answered: Doc White gave you a rough "rule of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A patient believes that they face two possible states of health in the coming year, poor health with a probability of 20%, in which the anticipated yearly costs will be $10,000. There’s the state of good health, with a probability of 80% which will cost them $5,000. Let’s say the insurance policy offered to this patient costs $7,500 for the year. Is this policy actuarially fair? Why or why not? What is the policy’s loading factor?
1. How much total money would you have spent out of pocket with each plan? 2. With each plan, how much total money would you have to spend before the insurance coverage pays 100% of your medical costs?
Deciding between traditional and Roth IRAs. Elijah James is in his early 30s and is thinking about opening an IRA. He can’t decide whether to open a traditional/deductible IRA or a Roth IRA, so he turns to you for help. To support your explanation, you decide to run some comparative numbers on the two types of accounts; for starters, use a 25-year period to show Elijah what contributions of $5,500 per year will amount to (after 25 years) if he can earn, say, 10 percent on his money. Will the type of account he opens have any impact on this amount? Explain. Assuming that Elijah is in the 22 percent tax bracket (and will remain there for the next 25 years), determine the annual and total (over 25 years) tax savings he’ll enjoy from the $5,500-a-year contributions to his IRA. Contrast the (annual and total) tax savings he’d generate from a traditional IRA with those from a Roth IRA. Now, fast-forward 25 years. Given the size of Elijah’s account in 25 years (as computed in part a),…
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ii. If a life insurance company insures 50 females age 25 for $40,000, 10- year term policies, how much would they expect to pay out? Solve
Using Table 19-1 and Table 19-2, calculate the annual, semiannual, quarterly, and monthly premiums (in $) for the life insurance policy. Round your answers to the nearest cent. Age 18 19 20 21 22 Face Value of Policy 23 24 25 26 27 28 29 30 TABLE 19-1 Annual Life Insurance Premiums (per $1,000 of Face Value) 35 40 $45,000 45 50 55 60 5-Year Term Male $2.32 2.38 243 2.49 2.55 2.62 32.69 2.77 2.84 2.90 2.98 3.07 3.14 Sex and Age of Insured 3.43 4.23 6.12 9.72 16.25 24.10 Term Insurance Female $ 1.90 1.96 2.07 2.15 2.22 2.30 2.37 2.45 2.51 2.58 male-50 2.64 2.70 2.78 2.92 3.90 5.18 8.73 12.82 19.43 10-Year Term 4.57 4.64 4.70 4.79 4.85 Male Female $4.33 $4.01 4.42 4.12 4.49 4.20 4.92 5.11 5.18 5.23 5.30 Type of Policy 6.42 7.14 8.81 14.19 22.03 37.70 20-payment life 4.29 4.36 4.42 4.47 4.51 4.60 4.69 4.77 4.84 4.93 5.35 6.24 7.40 9.11 13.17 24.82 Whole Life Male Female $11.17 $13.22 13.60 11.68 14.12 12.09 14.53 14.97 15.39 15.90 16.38 16.91 17.27 17.76 18.12 18.54 24.19 27.21 33.02 37.94…
An engineer is considering buying a life insurance policy for his family. He currently owes $65,000 and he would like his family to have an annual available income of $50,000 indefinitely. If the engineer assumes that any money from the insurance policy can be invested in an account paying a guaranteed 5% annual interest, how much life insurance should he buy? $1,000,000 $1,065,000 ● $2,000,000 $2,130,000
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Bobbi Hilton, 62, is considering the purchase of a 77-year long-term care policy. If nursing home costs average $7 comma 3907,390 per month in her area, how much could she have to pay out-of-pocket for 77 years without long-term care insurance? What can Bobbi do to reduce the cost of this coverage? Question content area bottom Part 1 The amount Bobbi would have to pay out-of-pocket for 77 years of nursing home costs without long-term care insurance is
9. Define out of pocket maximum. a. A flat-rate fee you must pay when receiving any kind of health care service. b. The maximum amount of money your insurance will cover of a certain health care service. c. The maximum amount you will have to pay out of pocket in one year for the benefits your insurance covers. d. The maximum amount of money the insured party will pay toward prescription medications.
Bobbi Hilton, 62, is considering the purchase of a 77-year long-term care policy. If nursing home costs average $7 comma 3907,390 per month in her area, how much could she have to pay out-of-pocket for 77 years without long-term care insurance? What can Bobbi do to reduce the cost of this coverage? Question content area bottom Part 1 The amount Bobbi would have to pay out-of-pocket for 77 years of nursing home costs without long-term care insurance is $620760620760. (Round to the nearest dollar.) Part 2 To lower the cost of long-term care insurance, Bobbi can: (Select all the choices that apply.) Select a longer waiting period (time between nursing home admission and payment of benefits by the insurance company.) Buy a long-term care policy as soon as possible before costs increase due to advancing age. Cover the costs of nursing home care through a combination of self-insurance (if she can afford it) and long-term care…

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