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Marie and Jack Smith are 34 and 37 respectively. The couple has two children, ages 8 and 4. Jack is concerned about leaving his family financially stable if his death occurs prematurely. He currently has $200,000 in group term life insurance provided by his employer. He thinks he needs more. He estimates his funeral costs and final expenses to be $10,000. . He has a home mortgage balance of $100,000, two auto loans totaling $13,000, and outstanding credit card debt of $10,500. He wants all of this debt to be paid He wants to establish an education fund for his children totaling $80,000. He estimates his wife would need $35,000, to help her through the readjustment period. . His family would qualify for $2,500 per month in Social Security benefits for 14 years, but they need a total $5,000 in monthly income. The shortfall can be satisfied with life insurance proceeds. . He is comfortable assuming a before tax rate of return of 8.00% and an inflation rate of 2.5%. The family is in the 25% MTB. NEEDS Debt Liquidation Other Needs Final Expenses Present Value of Future Income PMTad = CPT PV = TOTAL NEEDS CURRENT RESOURCES TOTAL RESOURCES ADDITIONAL INSURANCE NEEDED (NEEDS MINUS RESOURCES) Marie and Jack Smith are 34 and 37 respectively. The couple has two children, ages 8 and 4. Jack is concerned about leaving his family financially stable if his death occurs prematurely. He currently has $200,000 in group term life insurance provided by his employer. He thinks he needs more. He estimates his funeral costs and final expenses to be $10,000. . He has a home mortgage balance of $100,000, two auto loans totaling $13,000, and outstanding credit card debt of $10,500. He wants all of this debt to be paid He wants to establish an education fund for his children totaling $80,000. He estimates his wife would need $35,000, to help her through the readjustment period. . His family would qualify for $2,500 per month in Social Security benefits for 14 years, but they need a total $5,000 in monthly income. The shortfall can be satisfied with life insurance proceeds. . He is comfortable assuming a before tax rate of return of 8.00% and an inflation rate of 2.5%. The family is in the 25% MTB. NEEDS Debt Liquidation Other Needs Final Expenses Present Value of Future Income PMTad = CPT PV = TOTAL NEEDS CURRENT RESOURCES TOTAL RESOURCES ADDITIONAL INSURANCE NEEDED (NEEDS MINUS RESOURCES)

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