Fun.4.PPT.10 - Michael A Dalton | James F Dalton | Joseph M...

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Michael A. Dalton | James F. Dalton | Joseph M. Gillice | Thomas P. Langdon
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Fundamentals of Financial Planning © 2014 Money Education Chapter CHAPTER 10: DAVID AND AMY RUDOLPH CASE AND CASE ANALYSIS PART 1
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Fundamentals of Financial Planning © 2014 Money Education Chapter PERSONAL AND FINANCIAL OBJECTIVES They want to provide for Danny and Madelyn’s education. They want to retire debt free when David reaches age 62 (when they plan to retire). They need adequate retirement income. They want to have adequate risk management coverage. David is primarily concerned with providing income to Amy for the duration of her life and secondarily, leaving the remainder of his estate to their child, Danny. 3 10
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Fundamentals of Financial Planning © 2014 Money Education Chapter SUMMARY OF DATA COLLECTED LIFE CYCLE APPROACH 4 10
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Fundamentals of Financial Planning © 2014 Money Education Chapter EXTERNAL INFORMATION Economic Information Inflation is expected to average 2.5% annually for the foreseeable future. Tuition inflation is expected to be 6% annually. 5 10
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Fundamentals of Financial Planning © 2014 Money Education Chapter LIFE INSURANCE 6 10
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Fundamentals of Financial Planning © 2014 Money Education Chapter HEALTH INSURANCE David currently has an indemnity group health and major medical hospitalization plan through his company. Amy, David, and Danny are currently covered. DRI pays the entire premium. David’s plan has the following characteristics: $500 per individual deductible $1,000 total family deductible 80% co-insurance clause for major medical Unlimited lifetime benefits $3,000 annual family stop loss limit 7 10
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Fundamentals of Financial Planning © 2014 Money Education Chapter LONG-TERM DISABILITY INSURANCE 8 10
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Fundamentals of Financial Planning © 2014 Money Education Chapter PROPERTY AND LIABILITY INSURANCE 9 10
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Fundamentals of Financial Planning © 2014 Money Education Chapter AUTO INSURANCE 10 10
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Fundamentals of Financial Planning © 2014 Money Education Chapter INVESTMENT INFORMATION The Rudolphs have a required rate of return of eight percent on their overall portfolio. They have a moderate risk tolerance. David expects to be able to sell his interest in DRI to fund his retirement. Their emergency fund is primarily invested in a taxable money market account earning 0.75 percent. 11 10
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Fundamentals of Financial Planning © 2014 Money Education Chapter 12 10
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Fundamentals of Financial Planning © 2014 Money Education Chapter 13 10
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Fundamentals of Financial Planning © 2014 Money Education Chapter 14 10
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Fundamentals of Financial Planning © 2014 Money Education Chapter 15 10
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Fundamentals of Financial Planning © 2014 Money Education Chapter INVESTMENT INFORMATION As part of a financial planning engagement, David and Amy fill out a risk tolerance questionnaire. Below are their answers to the questions in the Global Portfolio Allocation Scoring System (PASS).
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