Life Insurance Planning Problem Dave and Sue are both 28 years old and expect to live...

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Life Insurance Planning Problem Dave and Sue are both 28 years old and expect to live to 100 - Sue is pregnant with their first child - They expect to have a second child in 2 years and a third in four years Dave earns $45,000 per year as a teacher Sue earns $20,000 per year as a part-time travel agent Child care would cost $6,000 per year through age 6 for each child. They expect each child to complete a 4-year college education. The cost of a private college education is currently $35,000 per year and is expected to rise at the rate of 6% per year Cost of living (inflation) is expected to rise 3% per year. Salaries for Dave and Sue are expected to keep up with inflation. Dave and Sue own a $100,000 house with a mortgage of $80,000 They have current credit card debt of $5,000 and still owe $20,000 on student loans Assume growth mutual funds are expected to yield 9% per year Dave and Sue both have great employer-provided defined benefit pension plans Living expenses for a spouse and 3 children is currently about $35,000 per year (assuming no mortgage) The cost of a funeral is currently about $7,000 Dave and Sue both have good employer-provided family medical insurance How much life insurance do they need to buy for Dave? For Sue? For each of the three children? Life Insurance Planning Problem Dave and Sue are both 28 years old and expect to live to 100 - Sue is pregnant with their first child - They expect to have a second child in 2 years and a third in four years Dave earns $45,000 per year as a teacher Sue earns $20,000 per year as a part-time travel agent Child care would cost $6,000 per year through age 6 for each child. They expect each child to complete a 4-year college education. The cost of a private college education is currently $35,000 per year and is expected to rise at the rate of 6% per year Cost of living (inflation) is expected to rise 3% per year. Salaries for Dave and Sue are expected to keep up with inflation. Dave and Sue own a $100,000 house with a mortgage of $80,000 They have current credit card debt of $5,000 and still owe $20,000 on student loans Assume growth mutual funds are expected to yield 9% per year Dave and Sue both have great employer-provided defined benefit pension plans Living expenses for a spouse and 3 children is currently about $35,000 per year (assuming no mortgage) The cost of a funeral is currently about $7,000 Dave and Sue both have good employer-provided family medical insurance How much life insurance do they need to buy for Dave? For Sue? For each of the three children?

Answer rating: 100% (QA)

Dave should have a life insurance policy of 500000 and Sue should have a life ins... View the full answer