Question

Home and Automobile Insurance

Newlyweds Jamie Lee and Ross have had several milestones in the past year. They are newlyweds, recently purchased their first home and now have twins on the way!

Jamie Lee and Ross have to seriously consider their insurance needs. A family, a home and now babies on the way, they need to develop a risk management plan to help them should an unexpected event arise.

Current Financial Situation:

Assets (Jamie Lee and Ross combined):

Checking account: $4,300   4900

Savings Account: $22,200    22800

Emergency Fund savings account: $20,500 21100

IRA balance: $26,000 26600

Car: $10,000 (Jamie Lee) and $18,000 (Ross)

Liabilities (Jamie Lee and Ross combined):

Student loan balance: $0

Credit Card Balance: $2,000

Car Loans: $6,000

Income:

Jamie Lee: $50,000 gross income ($37,500 net income after taxes)

Ross: $75,000 gross income ($64,000 net income after taxes)

Monthly Expenses (combined):

Mortgage: $1,252

Property Taxes and Insurance: $500

Utilities: $195

Food: $400

Gas/Maintenance: $275

Credit Card Payment: $250

Car Loan Payment: $289

Entertainment: $300

Questions:

1. Based on their current life status, what are some of the goals Jamie Lee and Ross should set to achieve when developing their insurance plan?

2. What four questions should Jamie Lee and Ross ask themselves as they develop the risk management plan?

3. Once Jamie Lee and Ross put their insurance plan in to action, what should they do to maintain their plan?

4. Jamie and Ross decided to conduct a check-up on their homeowner’s insurance policy. They noticed that they had omitted covering Jamie Lee’s diamond wedding band set from their policy. What if it got lost or stolen? It was a major purchase and beside the emotional value, the cost to replace the diamond jewelry would be very high.

Focus on Personal Finance - 180 Day Option, 5th Edition

Answer 1

1. The goals Jamie Lee and Ross should set to accomplish when building up their protection plan in current life status are :

Pay full liabilities of vehicle advance and Mastercard balance .

Make crisis or operational momentary store which empowers the transient needs in everyday activities and transient needs of new children.

Put resources into the Long expression intend to verify future with retirement plan. Increment funds in such plans

Purchase home for family

Spread the instruction, life, therapeutic of the family with protection inclusion. It gives the family security likewise, remaining supports expands the money liquidity in hands of both which lessens the credit whenever required in future or it gives solace of advance free life.

2. four inquiries ought to Jamie Lee and Ross ask themselves as they build up the hazard the board plan :

What are the known and obscure , dangers and vulnerabilities in life are there according to Jamie Lee and Ross ?

What amount are the reserve funds and assets accessible with Jamie Lee and Ross ?

How much sum will they needed to spend on the hazard inclusion ? Appropriately pick an Insurance Plan

How much sum they require to keep up the present way of life with objectives at present and in future ( Projected) ?

3. Once Jamie Lee and Ross put their protection plan vigorously, following should they do to keep up their arrangement :

Put aside the measure of premium of protection plan yearly at start of the year

Reestablish the protection at each period required according to protection arrangement.

Audit the Insurance plan at interims and check whether it is covering the all dangers and requirements of the family according to objectives.

4.As given circumstance, Jamie Lee and Ross either request that the protection operator spread the ring and pay the protection premium for the equivalent or as the estimation of the ring is exceptionally high then protection premium additionally be high Hence, in such case Jamie Lee and Ross will put the ring into the bank storage and pay the storage lease which is much lower than the Insurance Premium.