Chapter 12, Problem 2CC

Summary Introduction

Case summary:

J and R is a couple. They were the family of two until they were blessed with triplets and now the family of two has become the family of five. R started to worry about the increased family expenses due to triplets. He also started to worry about that if something happens to even one of them how will the surviving parent will able to take care of three children.

Character in this case: J and R.

Adequate information: Checking account: $2,500
Savings account: $16,000
Emergency fund savings account: $19,100
IRA balance: $25,000
Car: $11,500 (Jamie Lee) and $19,000 (Ross)
Credit card balance: $3,500
Car loans: $7,000
Jamie Lee: $45,000 gross income ($31,500 net income after taxes)
Ross: $73,000 gross income ($60,800 net income after taxes)
Mortgage: $1,225
Property taxes: $400
Homeowner’s insurance: $200
Utilities: $160
Food: $500
Gas/maintenance: $275
Credit card payment: $275
Car loan payment: $289
Entertainment: $125

To determine:

The amount of life insurance that the family would need.