Chapter 12 Solutions

# Chapter 12 Solutions - Chapter 12 Solutions 1 \$ 100,000...

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Chapter 12 Solutions 1) \$ 100,000 Face amount 1,666 Unpaid dividends + 1,200 Premiums paid in advance \$ 102,866 Subtotal – 3,000 Outstanding cash-value loan \$99,866 Death benefit. \$ 100,000 1,666 + 1,200 \$ 102,866 - 3,000 \$ 99,866 Face amount Unpaid dividends Premiums paid in advance Subtotal Outstanding cash-value loan Death benefit 2) a. Wanda needs \$138,734 in life insurance. Her income replacement needs are 179,290 [0.75 x 15,000 x 15.9369 (22 years at 3 percent rate PVA)]. In addition to her Social Security benefits of \$180,556 [\$1094 x 12 x 13.7535 (18 years at 3% PVA)], she desires that her life insurance policy include \$6000 for her burial, \$24,000 for her husband’s 6-month bereavement period, \$70,000 for the home mortgage, and \$90,000 for their three children’s college educations [\$6000 + \$24,000 + \$70,000 + \$90,000 = \$190,000 ]. Her total financial needs equal \$369,290 (\$179,290 + \$190,000). To find her additional life insurance needs, subtract her Social Security benefits and her universal life insurance policy of
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## This note was uploaded on 08/27/2008 for the course FIN 200 taught by Professor Delcorral during the Spring '08 term at Loyola New Orleans.

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