You and your spouse are in good health and have reasonably secure careers. You make about $75,000 annually and have opted for life insurance coverage of three times your salary through your employer. With your spouse's income, you are able to absorb ongoing living costs of $55,000 a year. You own a home with a $290,000 mortgage. Other debts include a $15,000 car loan, $7,000 student loan, and $4,000 charged to credit cards. In the event of your death, you wish to leave your family debt-free. One of your most important financial goals involves building an education fund of $100,000 to cover the costs of a four-year university program for each of your two children ages two and four. To date, you have accumulated $25,000 toward this goal in a RESP. Should you die, your beneficiaries would receive a $2.500 death benefit lump-sum payment from the Canada Pension Plan. You also have $35,000 in your company pension plan. Average funeral expenses are $12.000. Your other financial assets are as follows: Bank accounts Term deposits (3 months) Canada Savings Bonds Stock investment account BRSP $ 3,100 4,000 2,000 3,500 10,500 Use the family need method to determine your life insurance needs. Dependents need 5 years of income as living expense. Assume that there is a desire to have a 3 month reserve based on their annual income. (Omit the "S" sign in your response.) Additional life insurance needs
You and your spouse are in good health and have reasonably secure careers. You make about $75,000 annually and have opted for life insurance coverage of three times your salary through your employer. With your spouse's income, you are able to absorb ongoing living costs of $55,000 a year. You own a home with a $290,000 mortgage. Other debts include a $15,000 car loan, $7,000 student loan, and $4,000 charged to credit cards. In the event of your death, you wish to leave your family debt-free. One of your most important financial goals involves building an education fund of $100,000 to cover the costs of a four-year university program for each of your two children ages two and four. To date, you have accumulated $25,000 toward this goal in a RESP. Should you die, your beneficiaries would receive a $2.500 death benefit lump-sum payment from the Canada Pension Plan. You also have $35,000 in your company pension plan. Average funeral expenses are $12.000. Your other financial assets are as follows: Bank accounts Term deposits (3 months) Canada Savings Bonds Stock investment account BRSP $ 3,100 4,000 2,000 3,500 10,500 Use the family need method to determine your life insurance needs. Dependents need 5 years of income as living expense. Assume that there is a desire to have a 3 month reserve based on their annual income. (Omit the "S" sign in your response.) Additional life insurance needs
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
Problem 1PS
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Transcribed Image Text:You and your spouse are in good health and have reasonably secure careers. You make about $75,000 annually and have opted for
life insurance coverage of three times your salary through your employer. With your spouse's income, you are able to absorb ongoing
living costs of $55,000 a year. You own a home with a $290.000 mortgage. Other debts include a $15,000 car loan, $7,000 student
loan, and $4,000 charged to credit cards. In the event of your death, you wish to leave your family debt-free. One of your most
important financial goals involves building an education fund of $100,000 to cover the costs of a four-year university program for each
of your two children ages two and four. To date, you have accumulated $25,000 toward this goal in a RESP. Should you die. your
beneficiaries would receive a $2.500 death benefit lump-sum payment from the Canada Pension Plan. You also have $35,000 in your
company pension plan. Average funeral expenses are $12.000. Your other financial assets are as follows:
Bank accounts
Term deposits (3 months)
Canada Savings Bonds
Stock investment account
ARSP
$ 3,100
4,000
2,000
3,500
10,500
Use the family need method to determine your life insurance needs. Dependents need 5 years of income as living expense. Assume
that there is a desire to have a 3 month reserve based on their annual income. (Omit the "S" sign in your response.)
Additional life insurance needs
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