John is the primary breadwinner for his family, which consists of his wife and two young children. In determining his life insurance need, you decide to use the capital needs analysis approach. As you explain to the clients, the capital needs analysis focuses on the estimated deficit between assets and future needs (future cash flow needs and debt payments)
What additional life insurance is needed based on a capital need analysis should John pass away given the following inputs: final funeral expenses $20,000, liquidation of mortgage balance $350,000, pre-fund projected college tuition for children $160,000, group life policy $150,000, present value of annual income need for 10 years $600,000, present value of annual social security benefits for 10 years $180,000. (Show your work.)
$480,000
$1,160,000
$1,100,000
$800,000