Jennifer and Andrew Lawson are ages 32 and 43, respectively. The married couple has two children, ages 6 and 1. Andrew currently has $150,000 of employer provided group term life insurance. Calculate his life insurance need using the Needs Approach just as we did during lecture.

Andrew's annual income is $90,000. He wants to replace 80% of that income until the youngest reaches age 18 (17 years). · He estimates his funeral costs and final expenses to be $10,000. · He has a home mortgage balance owing of $125,000, two auto loans totaling $24,000 and outstanding credit card debt of $6,200. He wants all of this debt to be paid. · He wants to establish a college education fund (undergraduate) for his children at a cost of $8,000 per year for each child. Assume college fund 4 years. · He estimates his wife would need half of his income to help her through a readjustment period of six months. · He would like to leave a charitable bequest $25,000 to his alma mater. · His family would qualify for $2,600 per month in Social Security benefits for 16 years. · Assume an inflation rate of 4%.

Instructions: Use the Blackboard text editor to submit the assignment in a numbered format to the following questions:  

1. What is Andrew's income replacement need?
2. What is the total of other needs (final expenses, readjustment period, debt repayment, and college expenses)?

3. What amount of Social Security resources are available to offset the financial need?
4. How much additional life insurance should Andrew purchase? Jennifer and Andrew Lawson are ages 32 and 43, respectively. The married couple has two children, ages 6 and 1. Andrew currently has $150,000 of employer provided group term life insurance. Calculate his life insurance need using the Needs Approach just as we did during lecture.

Answer rating: 100% (QA)

1 Andrews income replacement need is Income replacement need Annual income x Replacement percentage ... View the full answer