CASE STUDY 16.2 Norman and Jennifer face the consequences of premature death

Norman Clancy, aged 54, is an electrician. For the past 10 years, he has successfully operated his own business. Norman's income from the business is $330,000 per year.

Norman's wife, Jennifer, is 38 and was a banking adviser for 10 years. There are two children: Julie, aged nine, and Peter, aged 11. It is Norman and Jennifer's desire that their children have the opportunity to go to university. To provide for this, they estimate that $60,000 should be set aside. The children would be dependent until they turn 25.

Jennifer's mother, Lyn, is living with the family. She is 66 and receives a small pension that covers her incidental expenses. Norman and Jennifer meet her other expenses, which amount to $300 per month.

The family's basic living expenses are $2,000 per month. In addition, for each family member (including parents), this will increase by $500 per person.

The Clancys own their own house, which has a value of $550,000 and a mortgage of $200,000. Credit cards and personal loans amount to $25,000. It has been agreed that, in the event of Jennifer's death, Norman's income will be sufficient to meet the family's needs, though debts would need to be paid out and other lump sum amounts met.

The life expectancy is to be taken as 80 years for males and 85 years for females.

There is a self-funded superannuation plan which will provide sufficient income from age 65 for either or both the Clancys. There is in force a policy on Norman's life for $250,000 and none on Jennifer's. Funeral and associated costs are expected to amount to $10,000, and final medical expenses will amount to $25,000. Legal and estate costs are anticipated to be $5,000. Additionally, they believe they need emergency funds of $20,000.

From the information provided, calculate the amount of cover necessary if separate life covers were to be effected for Norman and Jennifer.

Hey. Thank you for your help.

So far my answer reads:

Julie's needs:16 years x 12 months x $___ =$

Peter's needs: 14 years x 12 months x $___ = $

Add immediate costs needed:

Funeral and associated costs $10,000

Legal and estate costs$ 5,000

Emergency funds $20,000

Mortgage repayment $200,000

Final medical expenses$25,000

Credit card and personal loan debt$25,000

Total amount required$285,000

Less current life insurance in force$250,000

Less Superannuation$

Sum Insured required$

There is more information I have not included. I am just not sure how to complete this question. You have something similar on your website but I can't access it to check my work.

Thank you in advance :)