Question

Joetta Hernandez is a single parent with two children and earns ​$56,500 a year. Her​ employer's...

Joetta Hernandez is a single parent with two children and earns ​$56,500 a year. Her​ employer's group life insurance policy would pay 2.5 times her salary. She also has ​$75,333 saved in a​ 401(k) plan, ​$6,278 in mutual​ funds, and a ​$3,767 CD. She wants to purchase term life insurance for 15 years until her youngest child is​ self-supporting. She is not concerned about her outstanding​ mortgage, as the children would live with her sister in the event of​ Joetta's death. Assuming she can receive a 4 percent​ after-tax, after-inflation return on insurance​ proceeds, use the earnings multiple methods to calculate her insurance need. How much more insurance does Joetta need to​ buy? What other information would you need to know to use the needs approach to calculate​ Joetta's insurance​ coverage? Click on the table icon to view the PVIFA table LOADING...

Assuming she can receive a percent​ after-tax, after-inflation return on insurance proceeds, and using the earnings multiple​ method, Joetta's insurance need is ​$ ??. ​(Round to the nearest​ dollar.)

Homework Answers

Answer #1

Answer : Calculation of Additional Insurance Needed :

Current Insurance = 2.5 * Current salary

= 2.5 * 56500

= 141250

Insurance Required = Current Income * (1 - 0.26) * PVIF@4% for 15 years

Under Earning Multiple Method There is drop of 26% for two members

PVIF@4%for 1 yar taken from Table

Therefore

Joettta Insurance Required = Current Income * (1 - 0.26) * 11.118

= 56500 * (1 - 0.26) * 11.118

   = 464,843.58

Additinal Insurance Needed = 464843.58 - 141250

= $323593.58 or 323594

Under Needs Based Approach we need Immediate needs at the time of deceased such as burial Cost Estate Fees and also Debt payoff funds needed such as loans etc.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Joetta Hernandez is a single parent with two children and earns ​$57,100 a year. Her​ employer's...
Joetta Hernandez is a single parent with two children and earns ​$57,100 a year. Her​ employer's group life insurance policy would pay 2.5 times her salary. She also has ​$76,133 saved in a​ 401(k) plan, ​$6,344 in mutual​ funds, and a $3,807 certificate of deposit. She wants to purchase term life insurance for 15​ years, until her youngest child is​ self-supporting. She is not concerned about her outstanding​ mortgage, as the children would live with her sister in the event...
5. Rachel receives employer provided health insurance. The employer's cost of the health insurance is $5,500...
5. Rachel receives employer provided health insurance. The employer's cost of the health insurance is $5,500 annually. What is her employer's after-tax cost of providing the health insurance, assuming that the employer's marginal tax rate is 35 percent and is profitable? MULTIPLE CHOICE $0 $3,575 $4,198 $5,500 8. Meg works for Freedom Airlines in the accounts payable department. Meg and all other employees receive free flight benefits (for the employee, family, and 10 free buddy passes for friends per year)...
Joyce, a widow, lives in an apartment with her two minor children (ages 8 and 10),...
Joyce, a widow, lives in an apartment with her two minor children (ages 8 and 10), whom she supports. Joyce earns $33,000 during 2017. She uses the standard deduction ($9,350) and qualifies for head-of-household filing status. The personal exemption amount for 2017 is $4,050. Round all computations to the nearest dollar. Click to access Earned Income Credit and Phaseout Percentages Table and the tax rates schedules. a. Calculate the amount, if any, of Joyce's earned income credit. $ b. During...
A Married Couple with Children Address Their Life Insurance Needs Joseph and Marcia Michael of Athens,...
A Married Couple with Children Address Their Life Insurance Needs Joseph and Marcia Michael of Athens, Georgia, are a married couple in their mid-30s. They have two children, ages 5 and 3, and Marcia is pregnant with their third child. Marcia is a part-time book indexer who earned $31,000 after taxes last year. Because she performs much of her work at home, it is unlikely that she will need to curtail her work after the baby is born. Joseph is...
A Married Couple with Children Address Their Life Insurance Needs Joseph and Marcia Michael of Athens,...
A Married Couple with Children Address Their Life Insurance Needs Joseph and Marcia Michael of Athens, Georgia, are a married couple in their mid-30s. They have two children, ages 5 and 3, and Marcia is pregnant with their third child. Marcia is a part-time book indexer who earned $31,000 after taxes last year. Because she performs much of her work at home, it is unlikely that she will need to curtail her work after the baby is born. Joseph is...
Sally is 92 years old and single and claimed by her daughter as a dependent. During...
Sally is 92 years old and single and claimed by her daughter as a dependent. During the tax year she received $1,900 in interest from her savings account, $1,500 in interest from State of New York general obligation bonds, and $8,000 distributions from a Roth IRA. What is her AGI? $1,500 $1,900 $3,400 $11,400 2) Cranky, age 70, is single and an employee of Unknown Corporation. Her only sources of income in 2017 $80,000 of W-2 wages, $5,100 in alimony...
A New Family Calculates Income and Tax Liability Kate Beckett and her two children, Austin and...
A New Family Calculates Income and Tax Liability Kate Beckett and her two children, Austin and Alexandra, moved into the home of her new husband, Richard Castle, in New York City. Kate is a novelist, and her husband is a police detective. The family income consists of the following: $70,000 from Kate’s book royalties; $111,000 from Richard’s salary; $10,000 in life insurance proceeds from a deceased aunt; $110 in interest from savings; $4,420 in alimony from Kate’s ex-husband; $14,200 in...
Roberta Santos, age 41, is single and lives at 120 Sanborne Avenue, Springfield, IL 60781. Her...
Roberta Santos, age 41, is single and lives at 120 Sanborne Avenue, Springfield, IL 60781. Her Social Security number is 123-45-6789. Roberta has been divorced from her former husband, Wayne, for three years. She has a son, Jason, who is 17, and a daughter, June, who is 18. Jason’s Social Security number is 111-11-1112, and June’s is 123-45-6788. Roberta does not want to contribute $3 to the Presidential Election Campaign Fund. Roberta, an advertising executive, earned a salary from ABC...
Note: This problem is for the 2018 tax year. Roberta Santos, age 41, is single and...
Note: This problem is for the 2018 tax year. Roberta Santos, age 41, is single and lives at 120 Sanborne Avenue, Springfield, IL 60781. Her Social Security number is 123-45-6780. Roberta has been divorced from her former husband, Wayne, for three years. She has a son, Jason, who is 17, and a daughter, June, who is 18. Jason's Social Security number is 111-11-1112, and June's is 123-45-6788. Roberta does not want to contribute $3 to the Presidential Election Campaign Fund....
This problem is for the 2018 tax year. Roberta Santos, age 41, is single and lives...
This problem is for the 2018 tax year. Roberta Santos, age 41, is single and lives at 120 Sanborne Avenue, Springfield, IL 60781. Her Social Security number is 123-45-6780. Roberta has been divorced from her former husband, Wayne, for three years. She has a son, Jason, who is 17, and a daughter, June, who is 18. Jason's Social Security number is 111-11-1112, and June's is 123-45-6788. Roberta does not want to contribute $3 to the Presidential Election Campaign Fund. Roberta,...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT