Newlyweds Jamie Lee and Ross have had several milestones in the past year. They are newlyweds, recently purchased their first home and now have twins on the way! Jamie Lee and Ross have to seriously consider their insurance needs. A family, a home and now babies on the way, they need to develop a risk management plan to help them should an unexpected event arise. Current Financial Situation: Assets (Jamie Lee and Ross combined): Checking account: $6,300 Savings Account: $23,200 Emergency Fund savings account: $30,500 IRA balance: $36,000 Car: $10,000 (Jamie Lee) and $18,000 (Ross) Liabilities (Jamie Lee and Ross combined): Student loan balance: $0 Credit Card Balance: $4,000 Car Loans: $8,000 Income: Jamie Lee: $50,000 gross income ($37,500 net income after taxes) Ross: $75,000 gross income ($64,000 net income after taxes) Monthly Expenses (combined): Mortgage: $1,252 Property Taxes and Insurance: $500 Utilities: $195 Food: $600 Gas/Maintenance: $375 Credit Card Payment: $250 Car Loan Payment: $389 Entertainment: $300 Original Purchase Price of Home: $293,000 Based on their current life status, what are some of the goals Jamie Lee and Ross should set to achieve when developing their insurance plan What four questions should Jamie Lee and Ross ask themselves as they develop the risk management plan Once Jamie Lee and Ross put their insurance plan in action, what should they do to maintain their plan?

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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Home and Automobile Insurance

Newlyweds Jamie Lee and Ross have had several milestones in the past year. They are newlyweds, recently purchased their first home and now have twins on the way!

Jamie Lee and Ross have to seriously consider their insurance needs. A family, a home and now babies on the way, they need to develop a risk management plan to help them should an unexpected event arise.

Current Financial Situation:

Assets (Jamie Lee and Ross combined):

Checking account: $6,300

Savings Account: $23,200

Emergency Fund savings account: $30,500

IRA balance: $36,000

Car: $10,000 (Jamie Lee) and $18,000 (Ross)

Liabilities (Jamie Lee and Ross combined):

Student loan balance: $0

Credit Card Balance: $4,000

Car Loans: $8,000

Income:

Jamie Lee: $50,000 gross income ($37,500 net income after taxes)

Ross: $75,000 gross income ($64,000 net income after taxes)

Monthly Expenses (combined):

Mortgage: $1,252

Property Taxes and Insurance: $500

Utilities: $195

Food: $600

Gas/Maintenance: $375

Credit Card Payment: $250

Car Loan Payment: $389

Entertainment: $300

Original Purchase Price of Home: $293,000

Based on their current life status, what are some of the goals Jamie Lee and Ross should set to achieve when developing their insurance plan
What four questions should Jamie Lee and Ross ask themselves as they develop the risk management plan
Once Jamie Lee and Ross put their insurance plan in action, what should they do to maintain their plan?
Jamie and Ross decided to conduct a check-up on their homeowner’s insurance policy. They noticed that they had omitted covering Jamie Lee’s diamond wedding band set from their policy. What if it got lost or stolen
Mr. Ferrell, Jamie Lee and Ross’ insurance agent, suggested a flood insurance policy in addition to their regular homeowner’s policy. Jamie Lee and Ross looked quizzically at the agent, as they do not live within two miles of a body of water. What is the basis for Mr. Ferrell’s claim for the necessity of the flood policy?

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