Joe is 30 years old, married, and his wife is expecting their first baby. Joe makes $48,000 per year and has $200 budgeted per month to spend on life insurance. He has started looking at his options and has three choices: BAD WHOLE LIFE BETTER 20-YEAR TERM BEST 20-YEAR TERM $250,000 $500,000 Coverage $250,000 Premium $200/month $13/month $20/month Investments $0 $187/month $180/month Investment Value $34,000 at Age 50 $186,840 $179,847 Investment Value at Age 70 $124,000 $2,222,010 $2,138,835 *Always buy a policy that covers 10-12 times your annual pretax income! R FOUNDATIONS IN PERSONAL FINANCE Life Insurance Plans CHAPTER 9, LESSON 5 PAGE 1 OF 3 1. For each insurance option, how much would Joe pay in total premiums over 20 years compared the amount of coverage he would receive? 2. Which option is the best value for Joe's money? Why? 3. How did Joe arrive at the numbers in the investments row on his chart? 4. Why is Joe thinking about buying life insurance? 4. Why is Joe thinking about buying life insurance? 5. If Joe were to die at age 50, how much money would each option provide for Joe's wife to live on for the next 20 years? FOUNDATIONS IN PERSONAL FINANCE PAGE 2 OF 3 Life Insurance Plans CHAPTER 9, LESSON 5 6. Why should Joe consider buying life insurance? 7. What is the risk for Joe's family if he does not buy life insurance?
Joe is 30 years old, married, and his wife is expecting their first baby. Joe makes $48,000 per year and has $200 budgeted per month to spend on life insurance. He has started looking at his options and has three choices: BAD WHOLE LIFE BETTER 20-YEAR TERM BEST 20-YEAR TERM $250,000 $500,000 Coverage $250,000 Premium $200/month $13/month $20/month Investments $0 $187/month $180/month Investment Value $34,000 at Age 50 $186,840 $179,847 Investment Value at Age 70 $124,000 $2,222,010 $2,138,835 *Always buy a policy that covers 10-12 times your annual pretax income! R FOUNDATIONS IN PERSONAL FINANCE Life Insurance Plans CHAPTER 9, LESSON 5 PAGE 1 OF 3 1. For each insurance option, how much would Joe pay in total premiums over 20 years compared the amount of coverage he would receive? 2. Which option is the best value for Joe's money? Why? 3. How did Joe arrive at the numbers in the investments row on his chart? 4. Why is Joe thinking about buying life insurance? 4. Why is Joe thinking about buying life insurance? 5. If Joe were to die at age 50, how much money would each option provide for Joe's wife to live on for the next 20 years? FOUNDATIONS IN PERSONAL FINANCE PAGE 2 OF 3 Life Insurance Plans CHAPTER 9, LESSON 5 6. Why should Joe consider buying life insurance? 7. What is the risk for Joe's family if he does not buy life insurance?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Joe is 30 years old, married, and his wife is expecting their first baby. Joe makes $48,000 per
year and has $200 budgeted per month to spend on life insurance. He has started looking
at his options and has three choices:
BAD
WHOLE LIFE
BETTER
20-YEAR TERM
BEST
20-YEAR TERM
$250,000
$500,000
Coverage
$250,000
Premium
$200/month
$13/month
$20/month
Investments
$0
$187/month
$180/month
Investment Value
$34,000
at Age 50
$186,840
$179,847
Investment Value
at Age 70
$124,000
$2,222,010
$2,138,835
*Always buy a policy that covers 10-12 times your annual pretax income!
R FOUNDATIONS IN PERSONAL FINANCE
Life Insurance Plans
CHAPTER 9, LESSON 5
PAGE 1 OF 3
1. For each insurance option, how much would Joe pay in total premiums over 20 years
compared the amount of coverage he would receive?
2. Which option is the best value for Joe's money? Why?
3. How did Joe arrive at the numbers in the investments row on his chart?
4. Why is Joe thinking about buying life insurance?
Transcribed Image Text:4. Why is Joe thinking about buying life insurance?
5. If Joe were to die at age 50, how much money would each option provide for Joe's wife
to live on for the next 20 years?
FOUNDATIONS IN PERSONAL FINANCE
PAGE 2 OF 3
Life Insurance Plans
CHAPTER 9, LESSON 5
6. Why should Joe consider buying life insurance?
7. What is the risk for Joe's family if he does not buy life insurance?
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