BUSINESS MATH ASSIGNMENT 5 HOW MUCH IS ENOUGH? Alex and Christa are married and
ID: 2461204 • Letter: B
Question
BUSINESS MATH ASSIGNMENT 5 HOW MUCH IS ENOUGH? Alex and Christa are married and have two teenage children Alex works full-time as an electrical engineer and Christa works part-time as a floral designer. They own a modest 3-bedroom, 2- bath home on a ¼-acre lot and have two cars, and both have excellent credit. They recently attended a financial planning seminar that highlighted a number of issues, such as saving, investing, insuring, and tax and estate planning. Alex and Christa have decided to reassess their insurance needs to determine what portion of their budget should be designated for nsurance premiums They decide to review their auto insurance first. According to the literature they picked up, they live in territory 1. They own two cars, one of which is 2 years old and considered model class 1; the other is 6 years old and considered model class 2. They feel they should have S100/S300 bodily injury coverage, and S100,000 of property damage coverage. They decide to purchase comprehensive coverage $0 deductible and collision coverage with a $1,000 deductible on their newer vehicle, but they decide to forego comprehensive and collision coverage on their older vehicle. They both have excellent driving records, with no moving violations or at-fault accidents during the past 3 years Their insurance company allows a 5% discount for being accident free for 3 years and a 10% discount for insuring multiple vehiclesExplanation / Answer
1) Automobile Insurance :-
Couple owns 2 cars, one is Model class 1 and other is Model Class 2.
For Model 1 class, couple should have comprehensive coverage whether or not they are excellent prooven record for driving.
For Model 2, as the Car is 6 years old, couple can go for third party insurance, as the cost of Insurance is higher than any repair charges.
2)
Couple owns the property in Zone 1 and has the total value of @$180000. Couple should have umbrella coverage insuring all the value of property. Premium should be such that it covers about 80% of the value of property.
3)
A person should have life insurance, the sum insured should be about 10 times its annual earnings.
Annual earnings of Alex = 75000
Probable Life Insurance sum inured value = 10*75000 = 750000
Less : Already insured for = 75000
Additional coverage required = 675000
For determining Insurance premium, insurance table should be referred.
Remarks : - As the table for assertaining the premium value is not available in question, the total premium can not be computed.
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