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Joe, a 30-year-old expecting father, is evaluating three life insurance options with varying coverage and premiums. The best value for him is the 'Best' option, which provides $500,000 coverage for $20/month, significantly exceeding the recommended coverage of 10-12 times his income. Joe is considering life insurance to secure his family's financial future, as his death would leave them with a substantial loss of income.

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isaiah.ellis
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24 views

act-ch09-l05-english

Joe, a 30-year-old expecting father, is evaluating three life insurance options with varying coverage and premiums. The best value for him is the 'Best' option, which provides $500,000 coverage for $20/month, significantly exceeding the recommended coverage of 10-12 times his income. Joe is considering life insurance to secure his family's financial future, as his death would leave them with a substantial loss of income.

Uploaded by

isaiah.ellis
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Life Insurance Plans

CHAPTER 9, LESSON 5

NAME DATE
Isaiah Ellis 3/19/25

DIRECTIONS
Review the information on the chart below and then answer the questions.

Joe is 30 years old, married, and his wife is expecting their first baby. Joe makes $48,000 per
year and has $200 budgeted per month to spend on life insurance. He has started looking
at his options and has three choices:

BAD BETTER BEST


WHOLE LIFE 20-YEAR TERM 20-YEAR TERM

Coverage $250,000 $250,000 $500,000

Premium $200/month $13/month $20/month

Investments $0 $187/month $180/month

Investment Value
$34,000 $186,840 $179,847
at Age 50

Investment Value
$124,000 $2,222,010 $2,138,835
at Age 70

* Always buy a policy that covers 10–12 times your annual pretax income!

FO U N DATI O NS I N PERSONA L FI NA NCE PAGE 1 O F 3


Life Insurance Plans
CHAPTER 9, LESSON 5

1. For each insurance option, how much would Joe pay in total premiums over 20 years
compared the amount of coverage he would receive?
1.Bad pre: 48000 Bad cov:250,000
2.Better pre:3120 Better cov:250,000
3.Best pre:4800 Best cov:500,000

2. Which option is the best value for Joe’s money? Why?


The best one as it is the only one that is over 10 times his income.

3. How did Joe arrive at the numbers in the investments row on his chart?
He is see the cash value of the policy.

4. Why is Joe thinking about buying life insurance?


He is married and about to have a kid.

5. If Joe were to die at age 50, how much money would each option provide for Joe’s wife
to live on for the next 20 years?
1.Bad: $34,000
2.Better:$186,840
3.Best: $179,847

FO U N DATI O NS I N PERSONA L FI NA NCE PAGE 2 O F 3


Life Insurance Plans
CHAPTER 9, LESSON 5

6. Why should Joe consider buying life insurance?


He is about to have a kid and is married.

7. What is the risk for Joe’s family if he does not buy life insurance?
They would loss a big part of their income.

FO U N DATI O NS I N PERSONA L FI NA NCE PAGE 3 O F 3

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