| Income and Expense Statement |
|
|
| Year ending 12/31/2015 |
|
|
|
|
|
|
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| Income |
|
|
|
| Jim's Income |
$50,000 |
|
|
| Jane's Income |
$150,000 |
|
|
|
|
|
$200,000 |
| Expenses |
|
|
|
| Fed Income Tax, State Income Tax, and FICA |
|
$41,000 |
|
| Mortgage |
|
$31,512 |
|
| HOI |
|
$1,400 |
|
| Property Taxes |
|
$14,700 |
|
| Health Insurance |
|
$4,800 |
|
| Jim's Life Insurance |
|
$500 |
|
| Transportation Costs |
|
$1,000 |
|
| Car Insurance |
|
$1,200 |
|
| Food Costs |
|
$30,000 |
|
| Utilities |
|
$4,500 |
|
| Entertainment Costs |
|
$20,000 |
|
| Clothing |
|
$7,000 |
|
| 529 Plan Savings |
|
$5,000 |
|
| Jane's 401k |
|
$15,000 |
|
| Misc/Unaccounted |
|
$22,388 |
$177,612 |
|
|
|
$200,000
|
The James Family
Jim (age 26) and Jane (age 28) James are a married couple with 2 children, Sarah age 2 and Kyle age 1.
Jim works part time in sales and averages about $50,000 a year in income.
Jane is the Director of Operations for a small manufacturer of automotive parts. Her income is $150,000 per year.
Health Care
The family has a PPO healthcare policy through Jane's employer. The policy covers in network care which requires a copayment $15 for doctor's visit.
There are no deductibles or coinsurance for in-network care. Out of network care has a $500 deductible per person, 40% coinsurance responsibility, $5,000 maximum out of pocket per person and $12,000 OOP limit per family. The portion of the premium paid by the James family is $400 per month.
There is also an indemnity plan available. It has a $600 deductible, 20% coinsurance, $5,000 OOP max per person, and $13,000 OOP limit per family. This policy would cost the James $1,000 per month. Open enrollment starts next month and the James could change to this policy if they would like.
Disability
Jim does not have any disability insurance.
Jane has an own occupation disability policy that will replace 80% of her salary paid for by her employer.
Life Insurance
Jim has a $50,000 whole life policy he has had since he was 21. The premium is $500 per year. The cash value is $574. The surrender charge on the policy this year is $120, next year it is $60, and after that there are no longer any surrender charges that will apply if the policy is cancelled. Jim is the owner and the insured on the policy. His brother Jon James is listed as the beneficiary.
Jane has $50,000 of renewable term paid for by her employer. If Jane leaves her employer she can take the policy with her but will have to pay the premium, currently at $43 per year. Jim is listed as the beneficiary on the policy.
Use the attached documents above to evaluate and make recommendations for the Jame's family about their Health Insurance, Disability Insurance, and Life Insurance.
You will write your recommendations in a letter addressed to the James family. Make sure to describe your reasons for the choices you have made and to describe major features of any insurance you have chosen (eg if you want Jane to buy another $100,000 in life insurance is that 10 year level term, ordinary whole life etc...).
Be sure to include analysis of the amount of life insurance needed for Jim and Jane. This should be in the form of an excel file and you should use either the Human Life Value Approach or the Needs Approach.
The James Family Jim (age 26) and Jane (age 28) James are a married couple with 2 children, Sarah age 2 and Kyle age 1. Jim works part time in sales and averages about $50,000 a year in income. Jane is the Director of Operations for a small manufacturer of automotive parts. Her income is $150,000 per year. Health Care The family has a PPO healthcare policy through Jane's employer.
The policy covers in network care which requires a copayment $15 for doctor's visit. There are no deductibles or coinsurance for in-network care. Out of network care has a $500 deductible per person, 40% coinsurance responsibility, $5,000 maximum out of pocket per person and $12,000 OOP limit per family. The portion of the premium paid by the James family is $400 per month There is also an indemnity plan available. It has a $600 deductible, 20% coinsurance, $5,000 OOP max per person, and $13,000 OOP limit per family.
This policy would cost the James $1,000 per month. Open enrollment starts next month and the James could change to this policy if they would like Disability Jim does not have any disability insurance. Jane has an own occupation disability policy that will replace 80% of her salary paid for by her employer Life Insurance Jim has a $50,000 whole life policy he has had since he was 21.
The premium is $500 per year. The cash value is $574. The surrender charge on the policy this year is $120, next year it is $60, and after that there are no longer any surrender charges that will apply if the policy is cancelled. Jim is the owner and the insured on the policy.
His brother Jon James is listed as the beneficiary. Jane has $50,000 of renewable term paid for by her employer. If Jane eaves her employer she can take the policy with her but will have to pay the premium, currently at $43 per year. Jim is listed as the beneficiary on the policy.