Case 3 Insurance Review: The Case 3 PDF And Attachment

Case 3 Insurancereview The Case 3 Pdf And Attach A One Page Written E

Review the Case 3 PDF and prepare a one-page executive summary as if you were a professional adviser writing to the client. Investigate all issues, needs, and questions they have, summarizing the critical assumptions, facts, and findings. Include specific, actionable recommendations in your summary.

Paper For Above instruction

In addressing Ned and Nelly’s insurance needs, a comprehensive analysis reveals critical gaps and opportunities for optimizing their coverage to secure their financial future and lifestyle in retirement. Given their current age of 50, their projected retirement at age 65, and their desire to maintain their present lifestyle, it is essential to evaluate their existing policies and consider appropriate augmentations.

Assessment of Current Insurance Coverage

Ned's substantial life insurance, a Whole Life Policy of $500,000 with a cash surrender value of approximately $58,000, provides a solid foundation for his coverage. His supplementary work-provided life insurance, totaling 2X his salary with an option for an additional 5X, enhances his protection. However, the adequacy of the total coverage needs evaluation, especially considering his role as the primary breadwinner and the potential financial burden on the family in his absence. Conversely, Nelly’s current coverage, limited to a 1X salary through her school district, appears insufficient given her central role in their family and her active income.

Life Insurance Recommendations

Ned's Coverage:

Ned should consider increasing his life insurance coverage to match or exceed the combined needs of his family, factoring in income replacement, debt, and future expenses such as college costs for their children. An optimal coverage would likely be in the range of 8 to 10 times his annual income to ensure comprehensive protection. A combination of term life insurance for temporary coverage during their children’s dependent years and additional permanent insurance for estate planning and legacy purposes would be prudent.

Nelly’s Coverage:

Given Nelly’s vital role in the household and her limited current coverage, she should acquire a term life insurance policy covering at least 3 to 5X her annual salary. This would provide necessary financial security in the event of her untimely demise, covering household expenses, children's needs, and potential income replacement.

Restructuring Existing Insurance

It is advisable to review Ned’s existing Whole Life policy for its cash value and premium structure, exploring options to convert some of this into more cost-effective term policies if appropriate. Leveraging the cash value could fund additional coverage or serve as a part of a retirement strategy. For Nelly, transitioning her coverage into a typical term policy would be more economical and aligned with her needs.

Disability Insurance Considerations

Both Ned and Nelly currently possess disability coverage through their employers, providing 60% of salary until age 65. However, this benefit may be modest, and they should consider supplemental disability insurance, especially for Ned, given his high-stakes profession as a pilot. Additional coverage would ensure income continuity if disabled, covering higher earning potential and ongoing expenses.

Long-Term Care Insurance

While not immediate, prospective long-term care (LTC) insurance warrants consideration given their age and family health history. An LTC policy can mitigate the financial impact of potential nursing home or assisted living needs, which could otherwise deplete their estate and disrupt their retirement plans. Factors to assess include current health status, affordability, policy exclusions, and their willingness to pay premiums over the long term.

Additional Risk Factors and Considerations

Ned and Nelly face several other risks, including potential health issues, inflation, and unexpected family or financial emergencies. They should also consider setting up a comprehensive estate plan, including wills, powers of attorney, and trusts, to ensure their assets are protected and their wishes fulfilled. Regular policy reviews are essential to adapt coverage as their circumstances change.

Conclusion and Actionable Recommendations

In summary, Ned’s life insurance coverage needs to be increased through a combination of term and permanent policies to adequately protect his family's financial stability. Nelly should secure her own coverage sufficient to cover her role and responsibilities. Both should evaluate and potentially augment their disability coverage, especially considering Ned's career risks. Long-term care insurance is recommended for future planning, and regular reviews of their policies and estate plans are crucial to adjust to changing needs. Engaging a qualified financial adviser to tailor these recommendations and implement them efficiently will ensure their financial resilience and peace of mind.

References

  • America’s Health Insurance Plans. (2022). Understanding Disability Insurance. Retrieved from https://www.ahip.org
  • Brink, C. (2021). Insurance Planning Strategies for Retirees. Journal of Financial Planning, 34(3), 45-54.
  • Life Happens. (2023). How Much Life Insurance Do I Need? Retrieved from https://www.lifehappens.org
  • National Association of Insurance Commissioners (NAIC). (2022). Long-Term Care Insurance Study. Retrieved from https://www.naic.org
  • Petersen, M., & Koller, S. (2020). Financial Planning for Families: Insurance Strategies. CFP Board Research Journal, 12(1), 67-84.
  • Society of Actuaries. (2021). Disability Insurance: Benefits and Challenges. Retrieved from https://www.soa.org
  • U.S. Bureau of Economic Analysis. (2023). Retirement and Saving Data. Retrieved from https://www.bea.gov
  • U.S. Census Bureau. (2022). Family and Households Statistics. Retrieved from https://www.census.gov
  • Zaharias, G. A., & Mikos, M. (2019). Strategic Approaches to Insurance for Family Security. International Journal of Financial Studies, 7(4), 56.
  • Zurich Insurance Group. (2021). Long-Term Care and Its Financial Impact. Retrieved from https://www.zurich.com

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