PERSONAL INFORAMTION AND BACKGROUND Ken Jones, 47 years old, and Barbara Jones,
ID: 1197275 • Letter: P
Question
PERSONAL INFORAMTION AND BACKGROUND
Ken Jones, 47 years old, and Barbara Jones, 44 years old, have been married for 19 years. They have two children, John and Joan Jones, ages 17 and 15 respectively. The Jones own two cars and a five-bedroom home located in Silver Spring, Maryland. Ken owns a financial advisory firm, Jones Wealth Management, and Barbara works as the vice president for Computer Technologies, a local computer-consulting firm.
Ken Jones started Jones Wealth Management 12 years ago. He works as a financial planner and has four employees working for him. He owns the building where Jones Wealth Management is located.
Barbara Jones has been vice president of Computer Technologies for five years. Her previous employer, Advanced Technology Networks, took out and paid the premiums on a key person life insurance policy on Barbara. Advanced Technology Networks remains the owner and beneficiary of the policy on Barbara’s life, but Barbara has the right to buy the policy for its cash value when she retires.
The Jones estimates that the cost to educate John and Joan Jones at state university will be $45,000 and $55, 000 respectively.
PROPERTY AND CASULATY INSURANCE INFORMAITON
Car
100/300/50 Liability limits
$10,000 Medical payment
$250 Comprehensive Deductible
$500 Collision Deductible
100/300 Uninsured Motorists
100/300 Underinsured Motorists
Ken is the principal driver
Truck
10/100/50 Liability Limits
$10,000 Medical Payments
50/100 Uninsured Motorists
50/100 Underinsured Motorists
Barbara is the principal driver
HomeHomeowner’ Insurance (1)
HO-3 Policy Form $1,000 Deductible
$256,000 Dwelling
$25,600 Other Structures
$100,000 Liability
$1,000 Medical Payments
$2,000 Personal computer coverage valued basis (2)
(1) The replacement cost is $370,000
(2) Depreciation on the computer equals $1,000
LIFE INSURANCE INFORMATION
Ken Jones
Ken Jones has a universal life policy that he bought 12 years ago when he started his business. The face value of his policy is $500,000. The policy currently has $61,000 cash value. Ken has paid $5,000 per year in annual premiums since the policy’s inception. Barbara is the primary irrevocable beneficiary, and John and Joan are contingent beneficiaries. Ken also own a deferred annuity that will make payments for 10 years. Ken purchased this deferred annuity several years ago (3). The annuity is currently worth $50,000, and annual payments are expected to be $6,000 per year starting on Ken’s 62nd birthday. Ken is also shopping for some additional life insurance so that money would be available to fund the college education for John and Joan if something were to happen to Ken.
(3) The annuity was purchases with a $35,000 lump-sum payment
Barbara Jones
Barbara owns a whole life policy that she bought eight years ago. The face value of her policy is $250,000. The policy currently, has $1,200 in dividends and $5,500 in cash value. Barbara has paid $1,000 per year in premiums since the policy’s inception. Ken is the primary beneficiary of the policy. Barbara also participates in a split-dollar insurance plan for executives at Computer Technologies. The plan was set up five-years ago when Barbara joined the company. Barbara owns the policy, and Ken is the beneficiary.
Medical PaymentsPersonal computer coverage on valued basis (2)
HEALTH INSRUANCE POLICY INFORMATION
Ken Jones
Ken recently purchased an individual disability income policy that uses a split definition of disability. The policy has a 60-day elimination period and a benefit period of five-years. Ken is also interested in purchasing long-term care insurance and has recently priced some policies. He is also interested in purchasing a long-term care policy with the lowest possible premiums and a short waiting period.
Barbara Jones
Barbara carries major medical coverage for the entire family through Computer Technologies. The family calendar year deductible is $500, and the policy has an 80 percent so insurance provision. The coinsurance stop-loss provision limits the Jones’ total out-of-pocket costs per calendar year to $5,000 plus any deductibles. Barbara has recently considered purchasing a disability income policy. Her primary concern is a reduction in her income due to total disability or a less-than-total disability and decreased work capacity. Her goal is to keep premiums relatively low.
Which of the following is a risk reduction technique that Ken could use to help lower his insurance premiums
A. Increase the deductible on his auto insurance policy
B. Use hold-harmless agreements in leases.
C. Install a security system in his home.
D. Cover employee theft losses out of business income.
Which of the following would help Ken lower his homeowner’s insurance premiums?
A. ChanginghispolicytoanHO-5
B. Changing his dwelling coverage to broad from open-perils coverage
C. Changing his liability coverage limit to$200,000
D. Changing his personal property coverage to open-perils
Barbara was in the Jones’ detached garage, starting the lawn mower, when the lawn mower caught fire and burned the garage. Damages to the garage totaled $10,000. What was the insurance company’s payout to the Jones for the loss to the garage?
A. $9,000 under Coverage A
B. $9,000 under Coverage B
C. $7,649 under Coverage A
D. $7,649 under Coverage B
In December 2014, John Jones was driving the truck when he pulled into an intersection and hit another car. Two teenage girls were in the other car. One girl sustained injuries totaling $65,000, and the other girl sustained injuries totaling $23,000. The girls were driving a car that also sustained $12,000 in damages. John sustained injuries totaling $4,000, and damages to the truck totaled $3,000. What is the maximum that the insurance company could be required to pay out to the other parties in John’s auto accident?
A. $99,500
B. $88,000
C. $85,000
D. $84,500
Explanation / Answer
Which of the following is a risk reduction technique that Ken...
Ans: A. Increase the deductible on his auto insurance policy
Which of the following would help Ken lower his homeowner’s insurance premiums?
Ans: D. Changing his personal property coverage to open-perils
In December 2014, John Jones was driving the truck when he pulled into....
Ans: A. $99,500.
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Barbara was in the Jones’ detached garage, starting the lawn mower.....
Ans: D. $7,649 under Coverage B
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