Question
In: Finance
1. Life Insurance Needs for a Young Married Couple. Amy and Mack Holly from Rapid City,...
1. Life Insurance Needs for a Young Married Couple. Amy and Mack Holly from Rapid City, South Dakota, have been married for three years. They recently bought a home costing $212,000 using a $190,000 mortgage. They have no other debts. Mack earns $62,000 per year, and Amy earns $71,000. Each has a retirement plan valued at approximately $20,000. They recently received an offer in the mail from their mortgage lender for a mortgage life insurance policy of $190,000. Their only life insurance currently is a $20,000 cash-value survivorship joint life policy. They each would like to provide the other with support for at least five years if one of them should die. a.) What amount of coverage should they get? Explain.
Solutions
Expert Solution
| Calculations for support for at least five years if one of them should die | |
| Needs: | |
| Salary for 5 years taking the minimum salary of the two(62000*5) | 310000 |
| Retirement plan contributions(20000*5) | 100000 |
| Home mortgage | 190000 |
| Total needs | 600000 |
| Less: Cash value of Joint-LIP at hand | 20000 |
| Further insurance coverage amount needed | 580000 |
jeff jeffy answered 2 years agoRelated Solutions
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