Question

Taking the role of a financial planner, let's say you have a client (named Jane), who is a single mother of two in her late twenties. Due to attractive interest rates, Jane just bought her first house. She lives in Denton but drives to work each day in Frisco in a vehicle that she purchased, but is not fully paid for. What types of insurance does Jane need to have protection (mitigate risks) in all aspects of her life? Describe at least five types of insurance you would advise Jane to acquire and provide the rationale for each type. 2) In addition to your insurance recommendations for Jane, she would also like recommendations for investing and retirement planning. Note that Jane's employer has a retirement plan (401k) whereby Jane can choose from several mutual funds to invest in. Her employer provides a 5% matching contribution. Describe the type of mutual fund(s) you would advise Jane to acquire and provide the rationale for each type(s) and amount to invest. Also, provide a savings goal (amount needed for retirement as well as an income stream) for Jane that would provide for life expenses during retirement. 3) Jane has a religious aspect of her life and her particular religion does not accept the use of blood transfusions or blood products. In case of serious injury (severe body and/or mental impairment), Jane would want her sister to be placed in charge of all medical and financial decisions. If Jane is gravely injured and there is no chance of recovery (no brain activity), she does not want to placed on life support. Also very important to Jane is providing for her children in case of her demise and making sure that Jane's wishes regarding her children's support and education are fulfilled. She would desire for her sister to be the children's guardian. Provide all elements and rationale for the various aspects of estate plan recommendations that Jane should implement.

Answer 1

1.) Jane is expected to various risks related to health and property, the following insurances will help her:-

a) Term insurance- Jane must go for term insurance as through this insurance her dependent children will be financially secured even if her health detoriates and ultimately if in case they have to live on their own. Under term insurance cover is for long period of time and they are affordable as well

b) Health insurance i.e. Mediclaim- Mediclaim will help her and her children against all the high medical expenses that may occur in future. She must go for a group insurance so that she along with her children are covered.

c) Car insurance- For her vehicle damage.

2) Jane should go for such an investment plan in which she gets monthly benefits or benefits in a regular interval of time. Following investment plans should be considered:-

a) SIP(Systematic investment plan)- In this plan she can just pay small amounts monthly and can earn good returns over a period of time, thus resulting in less burden on her.

b) Dividend payoot plans- Mutual funds offer a variety of dividend payout plans. In which she can add some lumpsum amount and can reap monthly income out of it.

3. In this case, Jane should make a legal document stating that if anything happens to her than her children should be duly cared of and her sister should become legal gaurdian of her children so that all the needs of education, health etc can be given to them properly.