Your clients, Jamal and Chyna Gwynn would like you to estimate their disability insurance needs. Use the following information to determine the disability insurance need for Jamal and Chyna separately:

• Jamal: Age forty-eight; Life Expectancy: Age ninety-seven

• Chyna: Age fifty; Life Expectancy: Age ninety-five

• They would like to plan for disability until they turn age sixty-seven

178 Case Approach to Financial Planning

• Jamal Short-term Disability Benefits: None

• Chyna Short-term Disability Benefits: None

• Long-term Elimination Period: six Months

• Long-term Benefit Period: Until Age sixty seven

• Earned Income: Jamal $145,000

• Earned Income: Chyna $210,000

• Unallocated Monetary Assets: $95,000

• Unallocated Investment Assets: $400,000

• Bonus: Jamal $25,000

• Household Income Replacement Ratio in the Event of Disability: 80 Percent

• Federal Marginal Tax Rate: 24 Percent

• State Marginal Tax Rate: 5 Percent

• Emergency Fund Value: $50,000

• Value of Other Assets to be Used for Disability Needs: $200,000

• Before-Tax Investment Return: 4.50 Percent

• Jamal Group Monthly Long-term Benefits: $5,000 (premium paid with after-tax dollars)

• Chyna Group Monthly Long-term Benefits: $7,000 (premium paid with pre-tax dollars)

• Does Jamal Wish to Consider Social Security Disability Benefits? No

• Does Chyna Wish to Consider Social Security Disability Benefits? No

a. Approximately how much short-term disability insurance does Jamal need?

b. Approximately how much long-term disability insurance does Jamal need?

c. Approximately how much short-term disability insurance does Chyna need?

d. Approximately how much long-term disability insurance does Chyna need?

Answer rating: 100% (QA)

a Approximately how much short term disability insurance does Jamal need ANS WER Jam al needs 16 875 in short term disability insurance WORK ING Jam al s net monthly income is 145 000 25 000 120 000 H... View the full answer