Calculating Life Insurance

There are three common ways that insurance agents can determine the life insurance requirements of an individual: multiple income approach, human life value approach, or needs analysis.

Multiple Income Approach

The simplest way to calculate life insurance is a multiple of the individual’s income, usually five to seven times one’s income. However, one should consider existing properties and other sources of protection (Social Security, pension plans, savings—all discussed in later chapters) that may be included in the portfolio. A person needs to buy protection only for the uncovered balance. Agents also understand the subjective preferences of families: the desire or need to prefer current consumption over future savings, natural optimism, and so forth. These topics are related to complex economic theories that are not handled in this book.

Human Life Value Approach

This method considers your client’s age, gender, occupation, current and future earnings, and employee benefits. There are several steps to determining the overall value of the client if they were to die today:

• Estimate the client’s earnings from now until a set point in the future — typically their expected retirement age. Be sure to factor in future wage increases as well.
• Subtract the insured’s annual taxes and living expenses from the total. It’s usually safe to assume 30 percent of their salary will go to taxes.
• Select an assumed rate of return on the remaining total and subtract it from the gross amount. In other words, subtract the interest you expect the money to earn.
• Add the cost of additional benefits provided through employment, such as health care, that will need to be replaced when the client dies. Remember to account for inflation.

The primary goal of this method is to replace income lost. It doesn’t necessarily account for funeral costs, children’s educational expenses, or other specific future needs.

Capital Needs Analysis

The capital needs analysis is the most widely-used approach for estimating life insurance coverage. In addition to replacing the client’s salary, it also accounts for other sources of income and the specific needs of survivors.

This method factors in:

• Current and future income of both the insured and surviving spouse
• Immediate lump-sum cash needs upon death, such as funeral expenses, debt repayment, and mortgage payoff
• Future expenses such as college, weddings, long-term care expenses, and retirement funding
• Existing family assets, retirement funds, or insurance policies

Once all future needs are taken into consideration, there are then two ways to calculate how much insurance the client needs, based on how they want to utilize the funds in the future.

• Earnings-Only Approach: The survivors will live off only the investment earnings of the policy without cashing in the principal value. This method is preferable if the client wants funds to be available for their children after their spouse has also died. Like any investment, this method is subject to the risk of changing market interest rates. To provide a sufficient income stream, the death benefit is usually significantly higher than in the liquidation approach.
• Liquidation Approach: The surviving beneficiary utilizes a portion of the principal as well as the investment earnings. There is more risk with this approach, particularly if the investment earns less than originally predicted. The surviving spouse may not have sufficient income to live on for the remainder of their life.

What type of individual or couple would benefit from each of the life insurance calculation alternatives presented above?

Rachael Tomkins is 55 years old and is a certified practising accountant. She works part time and lives with her husband Paul, aged 64 and daughter Marie, aged 17. Her grandmother Jean aged 90, lives in a small flat at the back of their house and her mother Mary, aged 72 lives in an Over 55s housing unit nearby. In her early 20s Rachael’s father, a Vietnam Veteran, committed suicide. Rachael is described by her family as reliable and caring. She has a small group of friends from her local parish church. Rachael has regular contact with her GP to manage her Diabetes Type 2. She is prescribed metformin and has been trying to lose weight. She also sees a psychiatrist Dr Lianne Yu for management of her symptoms of schizophrenia. She is prescribed Olanzapine and Lithium. She was diagnosed with schizophrenia in her early 20’s when she was studying at university. She was hospitalised with acute psychosis several times before her symptoms were stabilised. She was able to complete her university degree and has worked part time. The last time she experienced acute psychosis was 17 years ago, just after the birth of her daughter. Her symptoms stabilised, and she has been maintained in recovery for almost 15 years. This year has been a particularly challenging year for Rachael. Both her husband’s parents passed away within months of each other, her daughter commenced Year 12 and her grandmother had an infection in her middle toe, which resulted in a series of trips to the doctor, hospitalisation and finally amputation of the affected toe. Rachael has become irritable with her family, and has developed erratic sleeping patterns, a lack of interest in grooming, and avoided social interactions with her friends or family. She complained to them that her neighbours were spying on her. In the 48 hours before she was admitted to hospital two incidents escalated Rachael’s need for professional help. In the first episode she yelled and threatened the neighbour across the fence. She accused him of spying on her with a ‘trackamanometer’. Her husband intervened and took her back into the house. In the second incident later that day, Rachael started screaming at her family to evacuate the house because they would be bombed. Rachael insisted the news reader on the TV was giving her this important information and they must all get out of the house. Rachael ran onto the road. A concerned neighbour called the police, who were able to convince her to accompany them to the hospital. She was met by her psychiatrist Dr Yu who reports the following -Rachael is dishevelled, dressed in pyjama top and tract pants, no shoes, she has an exacerbation of auditory hallucinations, with persecutory delusions and disorganised thinking. Rachael agrees to be admitted because she says ‘I’m frightened’. Rachael is admitted for inpatient psychiatric care.
In hospital, Rachael is argumentative and resistive to staff interactions and interventions, and her family are frightened and bewildered by her dramatic deterioration.

1. Identify, from the case study, the positive, negative and cognitive symptoms of schizophrenia experienced by Rachael at this presentation to the mental health service and discuss her prognosis and recovery;
2. Considering the case study, outline some common challenges and nursing interventionsassociated with the clinical presentation of a person who has been diagnosed with schizophrenia;
3. Identify the two psychotropic medicationsprescribed for the treatment of the symptoms of schizophrenia experienced by Rachael, and consider the importance of effective monitoring, consumer experiences (side effects) and safety factors;
4. Draw an ecomap to make a pictorial display of Rachael’s family relationships and medical history; Summarise key features of the ecogram for Rachael and her family and their environment (identify family and community connections, strength and quality (supportive/not supportive) of connections between individuals and community support networks/institutions( Refer to the required text Chapter 22 for more information about Genograms and Ecograms).;
5. Develop three questionsyou would ask Rachael during an interview to complete an MSE. They could be from any MSE area. Explain the reasonyou would ask these questions.
6. Complete a risk assessment(template in this tutorial outline);
7. Rachael will be admitted to the mental health inpatient unit. Write a nursing care planbased on a nursing diagnosis.

Common examples of variable costs include all of the following except: insurance on factory, direct materials, direct labor, any cost that changes in proportion to the changes in the leve of activity?

Discuss in depth the effect of renal failure on the other body systems. Must address metabolic changes (including fluid/electrolytes & acid/base), cardiovascular, hematologic and gastrointestinal changes. 

1) What are some of the evolutionary changes that made us humans? Provide THREE examples based on the lecture (origins of bipedalism, changes in the skeleton, etc.) or any other source.

Discuss the changes in morphology that have evolved to adapt plants to live on land. Include the changes that have reduced the loss of water, permit gaseous exchange on land, and are responsible for transport.

Compare the North American Free Trade Agreement (NAFTA) and the United States-Mexico-Canada Agreement (USMCA). How are they different? Are these changes likely to lead to material changes for Canada?

Discuss the Populist Movement of the 1890’s? What changes did they want? How successful were they in getting those changes? Be sure to consider the Election of 1896 in your answer.

Abortions for Minor Disabilities (London Times)—More than 50 babies with club feet were aborted in just one area of England in a three-year period, according to new statistics. Thirty-seven babies with cleft lips or palates and 26 with extra or webbed fingers or toes were also aborted. The data have raised concerns about abortions being carried out for minor disabilities that could be cured by surgery. Abortions are allowed up to birth in Britain in cases of serious handicap, but the law does not define what conditions should be considered grave enough to allow a termination late in the pregnancy. That is left to the discretion of doctors. The Commons science and technology committee is carrying out an inquiry into whether the law should be made more specific. Some parents, doctors and campaign groups are worried by what they see as a tendency to stretch the definition of serious handicap. In 2003 Joanna Jepson, a Church of England curate, instigated a legal challenge against West Mercia police for failing to prosecute doctors who carried out an abortion on a baby with a cleft palate at 28 weeks’ gestation. The challenge failed but raised public concerns over terminations for minor disabilities. However, the latest figures—released by the South West Congenital Register—show that dozens of abortions are still carried out after the condition is discovered. Jepson, now vicar of St Peter’s church in Fulham, west London, said: “These figures raise grave questions about how the law is being implemented for babies diagnosed with a disability. I have strong doubts that the law is being used to protect the unborn.” Julia Millington, political director of the ProLife Alliance, added: “It is incomprehensible that a baby would be rejected for what amounts to little more than a cosmetic imperfection. Equality for the disabled cannot be achieved until we remove this discriminatory provision in the law.”*  

Write 3 paragraphs on

Do you think it is ever morally permissible to perform an abortion on a defective fetus? What about a fetus that is so deformed that it will certainly die within a few days after birth? Or a fetus with deformities that will guarantee it a lifetime of pain and serious disability and years of emotional and financial trauma for its family? Can abortions performed on fetuses with minor disabilities such as a cleft lip ever be justified? Give reasons for your answers.