View the step-by-step solution to:

Sharon, age 28, is a single parent who earns $30,000 annually as a secretary at a local university.She is the sole support of her son, age 3.

Sharon, age 28, is a single parent who earns $30,000 annually as a secretary at a local university.She is the sole support of her son, age 3.Sharon is concerned about the financial well-being ofher son if she should die. Although she finds it difficult to save, she would like to start a savingprogram to send her son to college. She is currently renting an apartment but would like to own ahome someday.A friend has told her that life insurance might be useful in her present situation.Sharon knows nothing about life insurance, and the amount of income available for lifeinsurance is limited. Assume you are a financial planner who is asked to make recommendationsconcerning the type of life insurance that Sharon should buy. The following types of lifeinsurance policies are available:Five-year renewable and convertible termLife-paid-up-at –age 65Ordinary life insuranceUniversal life insurancea.Which of these policies would best meet the need for protection of Sharon’s son if sheshould die prematurely? Explain your answer.b.Which of these policies best meets the need to accumulate a college fund for Sharon’sson? Explain your answer.c.Which of these policies best meets the need to accumulate money for a down payment ona home? Explain your answer.d.What major obstacle does Sharon face if she tries to meet all of her financial needs bypurchasing cash-value life insurance?e.Sharon decides to purchase the five-year term policy in the amount of $300,000. Thepolicy has no cash value. Identify a basic characteristic of a typical term insurance policy thatwould help Sharon accumulate a fund for retirement.

1-Uses of term life insuranceTerm life insurance is appropriate in three situations.First, if the amount of income that can be


Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question