Life Insurance Plans
CHAPTER 9, LESSON 5
NAME DATE
Azar Dris 4/15/24
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?
$48,000 for bad option, $3,120 for better option, and $4,800 for best option.
2. Which option is the best value for Joe’s money? Why?
The third option, because the big amounts he spends on the invest will be returned to him on
bigger quantities, and also gives the best coverage
3. How did Joe arrive at the numbers in the investments row on his chart?
He calculated it
4. Why is Joe thinking about buying life insurance?
Because is an essential asset to protect his money when paying medical bills because of any injury
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?
$34,000 for the bad option, $186,840 for the better option, $179,847 for the best option
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?
Because is the most important insurance and he needs it in case he gets hurt
7. What is the risk for Joe’s family if he does not buy life insurance?
Having to pay big medical bills if someone gets injured
FO U N DATI O NS I N PERSONA L FI NA NCE PAGE 3 O F 3
