Textbook Problems

Microsoft® Excel spreadsheet with Three (3) Sheets:

Question: CASE 6

An Argument About the Value of Insurance

You have been talking at a party to some friends about insurance. One young married couple in the group believes that insurance is almost always a real waste of money. They argue, “The odds of most bad events occurring are so low that you don't need to worry.” Furthermore, they say, “Buying insurance is like pouring money down a hole; you rarely have anything to show for it in the end.” Based on what you have learned from this chapter, how might you argue against this couple's point of view?

Sheet 1. Write a 175- to 350-word response to Case 6 on p. 317 in Ch. 10 of Personal Finance.

Format this sheet to be sure your response is fully legible in the cell(s) in which typed (use wrap text if it runs off the screen and adjust column width and row height as needed). APA formatting is NOT required.

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Question: 2. Health Care Event Protection. Christina Haley of San Marcos, Texas, age 57, recently suffered a stroke. She was in intensive care for 3 days and was hospitalized for 10 more days. Her total bill for this care was $125,500. After being discharged from the hospital, she spent 25 days in a nursing home at a cost of $170 per day. Christina, who earns $4,500 per month, missed two months of work. Christina had a health insurance plan through her employer. The policy had a $1000 deductible and an 80/20 coinsurance clause with a $2000 coinsurance cap. She had also accumulated 21 sick days (equivalent to one month) at work. Otherwise she had no long-term care or disability income insurance.

(a) How much of Christina's direct medical expenses was paid by her insurance policy?

(b) What did Christina have to pay for her nursing home care?

(c) How much income did Christina lose?

Sheet 2. Complete "Do the Math", #2 on p. 344 in Ch. 11 of Personal Finance.

Show your computations and highlight the final numeric answer.

Format this sheet professionally and consistently. Use a separate cell(s) with section header for each of the requirements. Points are deducted for not using these headers. APA formatting is NOT required.

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Question: 1. Calculating Life Insurance Need. Review the material in “How Much Life Insurance Do You Need?” on pages 351–354. Then using dollar amounts that fit your personal situation, complete Worksheet 48: Determining My Life Insurance Needs from “My Personal Financial Planner.” If you are currently single and childless, for the purposes of this activity, assume that you are 30 years old, have two children under age 5, are married, and earn $60,000 per year and redo the estimate of need. How would having a family change your need for life insurance?

Sheet 3. Complete #1, "Calculating Life Insurance Need", on p. 376 in Ch. 12 of Personal Finance.

Show your computations. Copy/paste Worksheet 48 provided onto this sheet to use for this problem.

For any written response you include, Format this sheet to be sure your response is fully legible in the cell(s) in which typed (use wrap text if it runs off the screen and adjust column width and row height as needed). APA formatting is NOT required.

Click the Assignment Files tab to submit your Microsoft® Excel spreadsheet. Submit only 1 file for your assignment.

Materials

Personal Finance, Ch. 10 – Managing Property and Liability Risk

Personal Finance, Ch. 12 – Life Insurance Planning

Personal Finance, Ch. 11 – Planning for Health Care Expenses

Worksheet 48: Determining My Life Insurance Needs