Jay currently has some term life insurance through a group policy at work. The d
ID: 2791795 • Letter: J
Question
Jay currently has some term life insurance through a group policy at work. The death benefit is equal to twice his annual earnings. Nicky has a $65,000 term death benefit through her employment, and her whole life policy (remember the cash value of $3,000 from part 1?) is also for a $65,000 death benefit.
Jay's income is $45,000 and Nicky's income is $49,000.
Considering your answers to question 6, and the above, how much additional life insurance should they purchase for:
a. Jay?
b. Nicky?
(The answer to question 6 was: Jay's life insurance $220,500 and Nicky's life insurance $240,100)
Explanation / Answer
JAY
The death benefit is equal to twice his annual earnings
Death benefit = 2 X $45000 = 90000
life insurance = 220500
Therefore, Additional insurance to be purchased is $130500
NICKY
He has a $65,000 term death benefit through her employment, and her whole life policy is also for a $65,000 death benefit.
Death benefit = 2 X $65000 = 130000
life insurance = 240100
Therefore, Additional insurance to be purchased is $110100
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