Question: LIFE INSURANCE FOR THE YOUNG MARRIED

Jeff and Ann are both 28 years old. They have been married for three years, and they have a son who is almost two. They expect their second child in a few months. Jeff is a teller in a local bank. He has just received a $30-a-week raise. His income is $480 a week, which, after taxes, leaves him with $1,648 a month. His company provides $20,000 of life insurance, a medical/ hospital/surgical plan, and a major medical plan. All of these group plans protect him as long as he stays with the bank. When Jeff received his raise, he decided that part of it should be used to add to his family's protection. Jeff and Ann talked to their insurance agent, who reviewed the insurance Jeff obtained through his job. Under Social Security, they also had some basic protection against the loss of Jeff's income if he became totally disabled or if he died before the children were 18. But most of this protection was only basic, a kind of floor for Jeff and Ann to build on. For example, monthly Social Security payments to Ann would be approximately $1,250 if Jeff died leaving two children under age 18. Yet the family's total expenses would soon be higher after the birth of the second baby. Although the family's expenses would be lowered if Jeff died, they would be at least $250 a month more than Social Security would provide.

1. What type of policy would you suggest for Jeff and Ann? Why?

2. In your opinion do Jeff and Ann need additional insurance? Why or why not?