Question

Mark and Betty are thinking about starting a family. In preparation for this new phase of their life, they visited a local hospital to learn about the costs of delivery and care. They learned that the average cost for a normal birth is $7,500. This took Mark’s breath away, until he remembered his employer-provided insurance coverage, under which he and Betty are covered. The plan features are as follows.

●		$500 per person deductible.
●		20% coinsurance.
●		$3,000 out-of-pocket yearly maximum

Based on the hospital’s estimate and their insurance policy, how much will Mark and Betty pay if Betty gives birth in early January (the beginning of a new insurance year)? How much will the insurance company pay?

Mark and Betty will pay		$______
Insurance company will pay		$ _____

Since you last checked in with Mark, he received a promotion and raise at work. His new annual income is $47,500. Given his new promotion and the fact that he and Betty are thinking of starting a family, he is considering buying a disability policy. Because his employer does not provide this as an employee benefit, he needs to buy a policy in the open market.

How much replacement income should he shop for?

He should look for a policy that will replace $______ of his income.

How much might this type of policy cost per year?

He can expect to pay between $ ________ and $ ______ per year.

As a hopeful new mother, Betty is anxious to make sure that, as a family, their financial house is in order. She is thinking about buying a life insurance policy. Right now, she has $58,500 in coverage from her employer. Based on the estimation procedure, how much additional coverage should she shop for if her current salary is $33,900 per year?

Betty should shop for $_______

Mark has been collecting sports memorabilia for many years. Right now, his collection is worth only $900.

Does he need a personal property rider (floater) at this time?

                                                                      YesNo

Let’s say that he continues to collect and the value of the memorabilia increases to $3,600. Will he need a personal property rider at that time?

                                                                      YesNo

If yes, approximately how much will the rider cost?

Riders' cost

$_______

Answer 1

1. The maxiumum amount Mark and Betty will have to pay is till the limit of Out of Pocket for the year which is 3000 and the Insurance Company will have to pay balance 4500 (7500-3000)
2. Replacement income for disability policy should be between $21375-$30875 as he should look for a policy which will replace his Gross total income between 45%-65% (45%=21875 & 65% =30875)
3. Disabiltiy policy costs around 1%-3% of your annual salary hence it will cost "Mark" can expect to pay between $475  to $1425  per year
4. Betty should have a insurance coverage atleast 10 times of your annual Salary , her salary is 33900 per year hence she should have a coverage in total o f$ 339000 of which she already has $58500 coverage from her employer hencre she will have to buy an excess coverage of $ 280500 (339000 - 58500)
5. For the sports memolibia valuing 900$ it can be covered under Home Insurance and no need to take seperate rider for the same
6. If Market value of Sports Memolibia is quite high and it is very important for you then you should take a property rider for the same
7. Premium for the personal property rider would on sports memolibia sale value as sale value and details of the same is not mentioned premium for the same cannot be calculated