Question

Fred(age 51) is married to Kelly (age 46) and has two children ( ages 8 and 15). Fred is trying to determine an appropiate amount of life insurance to buy to replace the $14,000 annual Security benefit that Kelly will lose during the "blackout period" following Fred's death. If Fred dies today, how much life insurance would he need for this purpose?

Answer 1

When a spouse dies, the widow or widower can collect a Social Security benefit if the surviving spouse is caring for a child or children under 16 years old.

This benefit, called a survivor benefit, stops when the youngest child reaches age 16. The survivor benefit starts again when the surviving spouse reaches age 60.

As in the given case, Kelly will lose $ 14000 p.a Security Benefits during the blackout period following Fred's Death.

The period of time in between the time the youngest child turns 16 and the time the surviving spouse turns 60 is referred to as the ‘blackout period.

Particulars	Age	Max Age upto Blackout Period	Blackout Period
Kelly (Spouse)	46	60	14
Child 1	15	16	1
Child 2	8	16	8

So Maximum Blackout Period is 1 Years.

So Total Life Insurance Premium is needed = 14000 * =$14,000