Ken is using the needs approach to determine how much life insurance to buy. his cash...

Ken is using the needs approach to determine how much life insurance to buy. his cash needs are 40,000. his income needs are 240,000, and his special needs are 100,000. ken has the following assets: 20,000 in bank accounts, 30,000 in retirement plans, and 20,000 in investment accounts. ken owns no individual life insurance. his is covered by a 50,000 group life insurance policy through his employer. based on this information, how much additional life insurance should ken purchase?

Expert Solution

On adding, we find that Ken's total needs are $(40,000+240,000+100,000) = $380,000.
Ken already has total assets of $(20,000+$30,000+20,000) = $70,000. Hence, total insurance required by Ken is $(380,000-70,000) = $310,000.
Out of this, $50,000 is covered by group life insurance policy. Hence, additional life insurance required is $(310,000-50,000) = $260,000

jeff jeffy answered 2 years ago

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