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Case Study - Insurance Tom and Nancy Smith are married, with 2 children •Nancy is 38,...

Case Study - Insurance

Tom and Nancy Smith are married, with 2 children

•Nancy is 38, Tom 42

•Their children, Emily and Brian, are 16 and 18 respectively

•Brian will be going to College this fall

•Nancy is a CPA at a local accounting firm with an annual salary of $200K

•Hank teaches at the local high school where he coaches football and makes around $100K annually

•Nancy volunteers on the Board of Directors of a local Nonprofit

•Both Hank and Nancy are in good health and have an active lifestyle

•Both the Smiths and their children love Motorized Watersports

Assets

•Tom and Nancy own a 3-bedroom home with a market value of $500K

•They have two SUVs and a Sedan

•Both Emily and Brian drive

•The Smiths own an 18 ft Boat, which they store on their property

•They also own two Jet Skis

Long Term Goals for the Smiths Include:

•Income Replacement in case of the death of either Tom or Nancy

•College for their children

•Retirement Income is covered by Tom and Nancy’s Employment

•So you do not need to address this in this Case Study

Answer the following questions:

1-What are the Major Risks Tom and Nancy face?

2-What different insurance products do they need?

3-How much insurance should they carry?

4-If Life Insurance is recommended, what policy value?

Solutions

Expert Solution

1. Major risks they face

Tom and Nancy can lose their job. They need security with respect to that. They want security in terms of education for children.

2.Insurance

a. Health Insurance

b. Life Insurance

c. Education cover

3.Insurance should be around 500K as they have a lot of expenses coming up soon. This includes LIfe, Health.

4. Life Insurance is recommended for both of them

jeff jeffy answered 2 years ago
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