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Part 1 – Health Insurance
First, I would make certain that Samantha carefully considers her options during this
transition. It is especially important that Samantha can ensure that she has continuous coverage
during the transition between employers. The first option to bridge the gap in coverage would be
to consider choosing a short-term health plan. According to Dalton (2020), “these plans do not
provide minimum essential coverage, they usually exclude any pre-existing conditions, and, in
addition to meeting underwriting standards on initial application, the plans must be renewed
periodically by again going through a medical underwriting process”. One major advantage of a
short-term health plan is the low premium. The second option would be COBRA (Consolidated
Omnibus Budget Reconciliation). COBRA provides a continuation of group coverage under
certain circumstances, such as voluntary or involuntary job loss. Under COBRA, Samantha may
be required to pay the entire premium amount. I want Samantha to also consider the premium
amounts she would be required to pay. The third option would be the Health Insurance
Marketplace. The healthcare marketplace offers affordability, a wide range of health insurance
plans and premium tax credits for eligible individuals.
Part 2 – Life Insurance
Life insurance has always been important for families and loved ones, it helps provide a
safety net for individuals who want to make certain that their loved ones are protected when
income disruptions occur. Samantha wants to ensure that all three of her children are protected
and provided for in the event of her early death. Although Samantha has a small life insurance
policy, she will want to consider adding additional coverage. I would recommend whole life
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insurance for Samantha because it provides guarantees from the insurer that other life insurance
policies do not offer. In contrast to her small life insurance policy Samantha has through her
employer, a whole life insurance policy does not cancel. Granted the premium stated in the
contract is paid; whole life insurance will remain in effect during the entire life of the insured.
Advantages to having a whole life insurance policy are: “guaranteed premium payments;
guaranteed growth of cash value; guaranteed death benefit; permanent protection” (Dalton,
2020). Since I am Samantha’s financial planner, a whole life insurance policy is the best option
to ensure financial protection in the event of her early death.
Part 3 – Property & Casualty Insurance
The primary function of insurance is to provide financial protection in case of any
unforeseen events. Therefore, it is crucial to ensure that the new policy provides the same or
better coverage than the current policy. The client should read the policy terms and conditions
carefully and confirm that it meets their specific needs. Notwithstanding Samantha’s risk
tolerance, first I will review Acme’s AM Best Rating. Then if they had a rating of A or better, I
would review the replacement cost of Samantha’s home as well as her automobile. I would then
review the Homeowner’s policy property limits to ensure the total ensured values are adequate. I
would then look at the policy coverage forms and endorsements to include exclusions. I would
then determine Samantha’s assets and make sure the auto policy limits of liability were adequate
to protect her in case of an accident. This would include her homeowner’s insurance policy
liability limits. I might very well encourage her to consider a liability Umbrella policy to give her
an additional layer of liability limits to her home and auto policy.
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Part 4 – Annuities
An annuity could most certainly be appropriate for Samantha. It is important to consider
Samantha’s total assets and total income, including her bonus/stock options. I would ask the
question; can she afford to put aside $500,000? As Samatha’s financial planner, I most certainly
believe she can afford to put aside the $500,000. I would suggest a fixed annuity, according to
Dalton, “fixed annuities invest in less risky investments and guarantee returns for a period of
time” (2020). A fixed annuity is appropriate for a client who wants a guaranteed and stable
income stream. This type of annuity is not dependent on the markets or interest rates and is a
smart choice for a client who is expecting to live a long life and needs the safety net provided by
a fixed annuity. Additional benefits are tax-deferred gains, unlimited contributions, range of
benefits and secure monthly income. A variable annuity may be appropriate for a client who
seeks a potentially larger payout versus a fixed annuity and is comfortable taking on market risk.
“Variable annuities have a wider array of investment choices, including equity investments”
(Dalton, 2020). This type of annuity has more of a diversified investment portfolio, including
equity investments. The client can gain a higher rate of return and there is also a risk of loss that
comes with the uncertainty. Samantha already has the bonus/stock option at her work, a variable
annuity is not necessarily the best option.
Part 5 – Comprehensive
Estate planning covers a wide range of legal decisions and transactions, such as executing
wills and enduring documents, with each decision/transaction having its own standard of
capacity” (Purser & Sullivan, 2019). I would ask Samantha the question, do you want to decide
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how your assets will be distributed after your death”? Samantha’s concern about her adult
children implies that she would want to plan the inheritance left for her family carefully and that
such a desire would be why she would consider creating a will. As Samantha’s financial advisor,
I would recommend creating a comprehensive estate plan. With this, Samantha can ensure her
assets and property are distributed to the people of her choosing. According to Dalton (2020),
“among other things, it is about planning for risks, including the risks of untimely death and its
consequences, ill health, artificially sustaining life, inability to manage property, immaturity of
heirs, and the application of state intestacy rules that may be inconsistent with a person’s
wishes”. As Samantha’s financial planner, I would consider the fact that Samantha wants to
provide for all three of her children in the event of her early death. Creating an estate plan would
give Samantha peace of mind knowing that God forbid she dies an early death; her assets and
property will be distributed according to her requests.
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References
Dalton, M. A., & Langdon, T. P. (2020). Estate planning (12th ed.). St. Rosa, LA: Money
Education.Dhttps://libertyonline.vitalsource.com/books/9781946711342Links to an external site.
Dalton, J. F., Dalton, M. A., Langdon, T. P., & Gillice, J. M. (2020). Insurance planning
(7th ed.). Money Education.
Purser, K., & Sullivan, K. (2019). Capacity Assessment and estate planning - the
therapeutic importance of the individual. International Journal of Law and Psychiatry, 64, 88–
98. https://doi.org/10.1016/j.ijlp.2019.02.005
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