Assignment Chapter 08 Insuring Your Life Attempts Average 3 2. How much life insurance do you need? Calculating needs Part 1 Nick and Megan Doherty are 37 years old and have one son, age 5. Nick in the primary cames, making $57,000 per year. Megan does not currently work. The Dohertys have decided to use the needs analysis method to calculate the value of ance policy that would provide for Megan and their son in the event of Nick's death Nick and Megan estimate that while the son is still living at home, monthly living expenses for Megan and the child will be about $3,700 (current dollars). After their son leaves for college in 13 years, Megan will need a monthly income of $3,100 until she retres stages. The Doherty estrate Megan's living expenses after 65 will only be $2,700 a month. The life expectancy of a woman Megan's age is 7 years, so the Doherty family calculates that Megan will spend about 22 years in retirement Lang this information, complete the first portion of the needs analyses worksheet to estimate their total reng opemes Life Insurance Needs Analysis Worksheet Date Name of insured Nick and Megan Doherty aly JI 2015 Step 1: Financial resources needed er death Date Name of insured Nick and Megan Doherty Adly 3 2015 Step 1. Financial LES needed after death 1. Annual expenses and other needs Period 2 Period Period 1 $3,700 S Monthly tving expenses Not yearly income needed (ax 12) Number of years in time pened Total living needs per time period (tbx1) 13 22 15 $1,848,000 Total living expenses (add line 1d for each period to check your total) Assignment Chapter Insuring Your Life In addition to these monthly expenses, the future outlays must be accounted for before they had a Megan worked as a mechanical but her knowledge and skills are now somewhat outdated. Therefore, they include $30,000 for Megan to go back to school Mick and Megan want to create a college fund of $35,000 to fund the child's college edocation. They estimate that final expenses oneral costs and estate taxes) will amount to 512,000. Finally, they have taken out a loan for home improvements of 5130,000 and an automobile loan of $5.000. They their home but still have an outstanding mortgage of 5300,000 Using this information, complete the next portion of Step I to determine the total financial resources needed 5 50 2. Special needs Spouse's education fund b Child's college fund Other needs Final expenses (funeral costs and estate taxes) 4. Debt liquidation House mortgage Other loans Total debt (446) Other financial needs Total financial resources needed (add right-hand colunin plus the Total Living Expenses you calculated): $ $ 50 S True or False: The value of Nick and Megan's other savings and investments should be accounted for in the remaining portion of the form O True O False Grade It Now Save & Continue Continue without saving