John Jones is married, with a son, and would like to purchase enough life insurance to provide the following for his family.
Pay off home mortgage $200,000
Pay off car loan 20,000
Final burial expenses 10,000
College education for his son 60,000
Annual living expenses for his family 60,000/year for 20 years
If he were to die, his son and wife would receive $14,400 annually for 12 years from Social Security. His wife is also the primary beneficiary of his $100,000 group life policy. Given this information, how much more life insurance does John need? Additionally, John would like to keep his cash outlay as low as possible and the insurance policy that he purchases to last only 20 years.
What type of insurance policy would you recommend?
Show all calculations for full credit.