Question

1-What are the Major Risks Tom and Nancy face? 2-What different insurance products do they need? 3-How much insurance should they carry? 4-If Life Insurance is recommended, what policy value? Question:Tom and Nancy Smith are married, with 2 children •Nancy is 38, Tom 42 •Both have active lifestyles •They ski and snowmobile in the winter •Their children, Emily and Brian, are 6 and 8 respectively •Nancy is a CPA at a local accounting firm ($150K annual salary) •Hank teaches at the local high school ($85K) Assets •Three bedroom home worth $500K •Two SUVs •Snowmobiles Case Study - Insurance Long Term Goals for the Smiths. •Income Replacement in case of the death of either Tom or Nancy •College for their children •Retirement Income is covered by Tom and Nancy's Employment

1-What are the Major Risks Tom and Nancy face?

2-What different insurance products do they need?

3-How much insurance should they carry?

4-If Life Insurance is recommended, what policy value?

Answer 1

Answer 1: Risk are a part of life and the smartness to tackle them is to get insured against those risks. The major risks that Tom and Nancy face are the risk of life and health. These two risks are primary and apply to every individual.The risk of life arises as they both go for ski and snowmobile in winter. They have a good net worth and income. Some savings out of their income can do wonders in tough times.

Answer 2 : They require life insurance and health insurance. The reason is that skiing and snowmobile are adventure sports in which risk of life is present. Hence in order to protect their loved ones from monetary issues they should take a life insurance.

Health insurance is something that is very vital in tough times and it saves one's pocket from being drained if the person has a life insurance. Life is full of uncertainties and health should be our priority. Hence having a health insurance is must in order to avoid those hefty expenditures of the hospitals.

Answer 3: The amount of life insurance they should carry is minimum $25 million and health insurance of atleast $15 million. This is a feasible amount and they won't be burdened by the hefty insurance premiums also.

Answer 4: Life Insurance is definitely recommended having a minimum value of $25 million each. Since  skiing and snowmobile are adventure sports in which risk of life is present. Hence in order to protect their loved ones from monetary issues they should take a life insurance . Having the life insurance will ensure that after them their children will not be having any issues relating to money etc and they can have a monetary support in the form of life insurance amount of their parents.