3. Joetta Hernandez is a single parent with two children and earns $45,000 a year. Her employer's group life insurance policy will pay 2.5 times her salary. She also has $60,000 saved in a 401(k) plan, $5,000 in mutual funds, and a $3,000 certificate of deposit. She wants to purchase term life insurance for 15 years, until her youngest child is self-supporting. She is not concerned about her outstanding mortgage, as the children would live with her sister in the event of Joetta's death. Assuming she can receive a 3 percent after-tax, after-inflation return on insurance proceeds, use the earnings multiple method to calculate her insurance need. How much more insur- ance does Joetta need to buy? What other information would you need to know to use the needs approach to calculate Joetta's insurance coverage? 5. The Baulding family has a basic health insurance plan that pays 80 percent of out-of-hospital expenses after a deductible of $250 per person. If three family members have doctor and prescription drug expenses of $980, $1,840, and $220, respectively, how much will the Baulding family and the insurance company each pay? How could they benefit from a flexible spending account established through Mr. Baulding's employer? What are the advantages and disadvantages of establishing such an account