Chapter 12, Problem 1FPC

Summary Introduction

Case summary:

J and A are both married couple with 28 years of age. They have a 2 year old son and they are also expecting a new child within a few months. J has received a raise of $60 per week. He earns $960 per week and $3,200 as monthly after tax income. His employer provides him coverage of $50,000 in the form of life insurance, medical plan and major medical plan. All of this plan will remain effective till he stays with the bank. J wants to use his raise to increase his family protection. So, they want to meet insurance agent. They also have some social security but the social security will give him only $1,550 per month and even if J dies their expenses will be $500 more than what social security gives.

Character in this case: J and A.

Adequate information: Monthly after tax salary is $3,200.
Raise is $60 per week.
Insurance coverage is $50,000.
Social security coverage is $1,550.
Amount left after social security coverage is $500.

To determine:

Whether they need additional insurance or not and reason for it.