Text Book Problems
FIN 420
Text Book Problems
So, I was at a party with Dan and Jane and both started a conversation stating how worthless insurance is when it comes to home, auto, and medical insurance. Now, what they don’t know is that although having auto insurance is the law it protects them from so many different perils. For example, let’s say Jane ran out of gas and Dan is far away she could contact her insurance to help her fill her gas tank so she can get home. Insurance is the guarantee way of being help just in case something drastic happens. We pay for insurance because we never know when bad things happen to weather it is a car accident or a person must be treated for cancer. I would pay for insurance because once those situations occur without insurance things can become pricey. If I had a life insurance policy that had a cash value that could be used for personal reasons and won’t be taxed by the IRS unlike Roth IRA’s that are taxed If money is pulled out early. Many people like Jane and Dan don’t realize how much control they could have with insurance. Let’s say they were looking to save for retirement and needed a place to put money for retirement and gain money, they could easily open an Index Universal Life policy.
IULs will give capital gains with no risk of losing money and can give an easy way to shelter money tax free. This kind of policy comes with a life benefit and child riders just in case Jane and Dan decide they want kids.
Chapter 11
Christina will have to pay $2000 for her deductible which will cover her up to $123,500 for her medical bills but they won’t pay for nursing home care
Christina will have to pay for each day she was in her nursing home which is $4250 out of her own pocket.
She will lose out on $4875 in income because she must pay 2000 for her insurance policy and she would only be able to pay half of the $4250 which is $2125. If she didn’t pay, her nursing home she would have to owe more.
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