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Question 1 of 3
1. Question
John is a 40 year-old married client with two young children whose current annual earnings are $50,000. Of that annual wage, his total state and federal income taxes amount to $5,000, his annual life insurance premiums are $600, and he believes that his self-maintenance costs are about $100 weekly. He expects that over his remaining working life he will have average annual earnings of about $60,000. If he expects to retire at age 65 and current passbook interest rates are about 3%, what is his approximate economic value under the human life value method? (Use the present value factor for a $1 annuity shown in the excerpt below)
Present Value Factor for a $1 Annuity Years
2% 3% 4% 5% 6% 7% 8%
20 25
30
40
16.3514 19.5235
22.3965
27.3555
14.8775 17.4131
19.6004
23.1148
13.5903 15.6221
17.2920
19.7928
12.4622 14.0939
15.3725
17.1591
11.4699 12.7834
13.7648
15.0463
10.5940 11.6536
12.4090
13.3317
9.8181
10.6748
11.2578
11.9246
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Question 2 of 3
2. Question
The human life value method of calculating an individual’s life insurance need has been criticized as being flawed. Which of the following is NOT an identified flaw of the human life value method?
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Question 3 of 3
3. Question
Which of the following is characteristic of the needs analysis method of determining an individual’s life insurance needs?
