Personal finance

This is the answer from my friend!

Analyze and decide whether you agree or disagree with the conclusions, explaining why.
Problem 7:
a. The single woman is without dependants has very little need for life insurance, due to lack of beneficiaries who would be financially negatively impacted by her death, and so I disagree. She does not need a $100,000 life insurance policy. The agent is right about the premiums increasing as her mortality rate increases and the premiums spreads over a shorter period, as a result of postponing the purchase of life insurance, yet the group policy is enough and is much less costly to her than the $100,000 whole life policy.
b. The woman is widowed soif she dies, the kids will suffer financial hardship, and so they need the life insurance policy to support them to be able to live well and spend. Also they need more money if the death occurs now, than later, because they will need to support their spending for a longer period of time to make up for the loss of their mother’s income. So, I agree with the woman, she needs more term insurance than permanent insurance with lower value, because for the same amount of premium, she would get a higher value of life insurance in a term policy than a permanent life insurance.
c. A family policy is the right policy, but the amounts are not high enough, so I disagree with this conclusion. The couple are not covering the major risks that would encounter them if a person dies, especially if a parent dies, especially the father; who is the major income earner. They would not be able to provide a lump-sum payments to endowments for the kids to make up for the lost income due to death of a parent, especially if the father dies. Education costs will not be covered through the policy, and neither would the policy be able to establish an estate plan. It will barely pay for funeral expenses for the kids and the mother, and in case of the death of the father, although more money is left, yet much more is actually lost due to the death, and so the amount must be much higher, maybe $253,500, based on the worksheet on page 258.
d. The couple is right, they should not cash in the policy and get $12,200, but rather the should keep the insurance policy to cover the financial needs of the wife in case of the death of the husband, so I agree. In this case the couple age is about the same, I think the wife is 73, and the husband is 75 and so there is over 50/50 chance of the wife outliving the husband, since she is younger and according to demographic stats, women tend to live longer than men, on average,and so it is worth giving up $12,200 + $175 = $12,375 to get 0 or $25,000, because the probability of getting the $25,000 is more than the probability of getting 0.

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preview of the answer…

The single mother has signed a group policy cy with her employer. The policy may expire anytime they are detached due different factors such as death. She will have no beneficial beyond; her policy will increase gradually as her mortality rate increases. I totally disagree with a situation that expects her to pay $100, 000 in life insurance policy. The single mother should reconsider her agent’s terms that reflect how life time insurance premiums spread over a short period of time.

APA 510 words