Template:Life Insurance Calculator Exercise

From Planipedia

 

Solve for the following problem:

Your clients, the Blacks, want to know the probable costs to replace 20% of Walter’s income, until Alice’s age 61, in the event of his death. When asked what lump sum costs they may expect, they identified {{{Funeral Expenses}}} in funeral expenses and another {{{Unforeseeable Costs}}} in unforeseeable costs. Walter’s Whole Life Policy is for {{{Walter's Whole Life Policy}}} and Alice’s Whole Life Policy has a benefit of {{{Alice's Whole Life Policy}}}. Walter also has 5-Year Term Insurance has a benefit of {{{Term Insurance}}}.

Solve for the following problem:

Your client feels that in the event of his wife’s death he would only need to replace 40% of her income, for a period of 5 years, since they are without children. However, he felt he would have significant lump sums costs that he wanted to plan for including: {{{Funeral Expenses}}} for funeral expenses, as well as moving expenses of about {{{Moving Expenses}}} since he would want to move closer to his family.

How much capital does he require at an after-tax rate of return of:

• 4.0%?
• 5.0%?
• 6.0%?

Check the accuracy of your client against the answer key