information for Sampson’s Case 11 Excel
They currently have auto insurance on their two cars. Each insurance policy has a $1,000 deductible and specifies limits of 100/200/20 ($100,000 per person injured in an accident, $200,000 for all people combined, and $20,000 to cover other damage to the car or to other property). Dave and Sharon live in a no-fault state.
Their homeowner’s insurance covers the market value of their home and has a deductible of $10,000. Their policy does not cover floods, which periodically occur in their area. Their house has never been flooded, though, so Dave and Sharon are not concerned.
1) Advise the Simpsons regarding their car insurance. Do they have enough insurance? Do they have too much insurance? How might they be able to reduce their premium?
2) Consider the Sampson’s’ homeowner’s insurance. Do they have enough insurance? Do they have too much insurance? Should they increase their deductible?
Information for Sampson’s Case 12 Excel
Dave and Sharon Sampson are assessing the amount of health insurance and disability income insurance they have.
The Sampson’s’ health insurance is provided by a health maintenance organization (HMO). Recently, Dave and Sharon have heard about preferred provider organizations (PPOs) and are wondering whether they should switch to a PPO. The health care plan provided by Dave’s employer allows them to use either an HMO or a PPO, but they would have to pay higher premiums for a PPO. Upon hearing that PPOs are more expensive than HMOs, Dave and Sharon are hesitant to switch, but they have not yet made up their minds. Dave and Sharon are both happy with their primary care physician and any specialists they need to consult under their HMO plan.
Dave and Sharon currently do not have disability income insurance because they do not believe that they are at risk of becoming disabled. Dave and Sharon typically have monthly expenses of at least $4,000, none of which are work related.
1)Make suggestions to the Simpsons regarding their health insurance. Do you think they should switch from the HMO to a PPO? Why or why not?
2)Do you think the Sampson’s should purchase disability insurance? Why or why not?
3)Should the Sampson purchase long-term care insurance? Why or why not?
Information for Sampsons Case 13 Excel
The Sampsons want a life insurance policy that will provide for the family in the event of Dave’s death because he is the major breadwinner. Specifically, they want life insurance benefits that could provide $40,000 per year for the next fifteen years in the event of Dave’s death. Dave also wants to add an additional $300,000 of insurance coverage to provide support for Sharon through her retirement years because they have not saved money for retirement.
1)Determine the present value of the insurance benefits that could provide $40,000 per year over the next fifteen years for the Sampson family. Assume that the insurance payment could be invested to earn 3% interest over time.
Annual Amount 40,000
Number of Years 15
Annual Interest Rate 3%
Present Value $
2)Considering the insurance benefits needed to provide $40,000 per year over the next fifteen years, plus the additional $300,000 of insurance coverage, what amount of insurance coverage is needed?
3)Dave Sampson is a social smoker. Because he only smokes occasionally, he would like to omit this information from his life insurance application. Advise Dave on this course of action.
