George and Mary Keys are very excited over the news that they are to be parents. Since their graduation from college three years ago, they have purchased a new house and a new car. They owe $130,000 on the house and $8,000 on the car. Their only life insurance consists of $75,000 of term coverage on George and $50,000 on Mary. This coverage is provided by their employers as an employee benefit. Their personal balance sheet shows a net worth (assets minus liabilities) of $80,000. George is rapidly moving up within his company as special projects engineer. His current annual salary is $60,000. In anticipation of the new arrival, George is considering the purchase of additional life insurance. He feels that he needs at least $500,000 in coverage, but his budget for life insurance is somewhat limited. The couple has decided that Mary will stay at home with the new baby and put her career on hold for ten years or so while this baby, and perhaps a later sibling or two, are young. a. As George’s agent, advise him as to the type(s) of life insurance that seem(s) most appropriate for his situation. b. George indicates to you that his financial situation will change in five years when he receives a one-time payment of approximately $100,000 from his uncle’s estate. In what way would this information affect the type of life insurance you recommend to George?
. George and Mary Keys are very excited over the news that they are to be parents. Since their graduation from college three years ago, they have purchased a new house and a new car. They owe $130,000 on the house and $8,000 on the car. Their only life insurance consists of $75,000 of term coverage on George and $50,000 on Mary. This coverage is provided by their employers as an employee benefit. Their personal balance sheet shows a net worth (assets minus liabilities) of $80,000. George is rapidly moving up within his company as special projects engineer. His current annual salary is $60,000. In anticipation of the new arrival, George is considering the purchase of additional life insurance. He feels that he needs at least $500,000 in coverage, but his budget for life insurance is somewhat limited. The couple has decided that Mary will stay at home with the new baby and put her career on hold for ten years or so while this baby, and perhaps a later sibling or two, are young.
a. As George’s agent, advise him as to the type(s) of life insurance that seem(s) most appropriate for his situation.
b. George indicates to you that his financial situation will change in five years when he receives a one-time payment of approximately $100,000 from his uncle’s estate. In what way would this information affect the type of life insurance you recommend to George?
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