Sophie Lopez is a 72-year-old widow who has recently been diagnosed with Alzheimer’s disease. She has limited financial assets of her own and has been living with her daughter Felicity for two years. Her income is $850a month in Social Security survivor’s benefits. Felicity wants to make surethat her mother will be taken care of if Felicity should die prematurely. Felicity, 40, is single and earns $55,000 a year as a human resources manager for a small manufacturing firm. She owns a condo with a current market value of $100,000 and has a $70,000 mortgage. Other debtsinclude a $5,000 auto loan and $500 in various credit card balances. Her 401(k) plan has a current balance of $24,500, and she keeps $7,500 in a money market account for emergencies. After talking with her mother’s doctor, Felicity believes that her mother will be able to continue living independently for another two to three years. She estimates that her mother would need about $2,000 a month to cover her living expensesand medical costs during this time. After that, Felicity’s mother will probably need nursing home care. Felicity calls several local nursing homes and finds that it will cost about $5,000 a month when her mother enters a nursing home. Her mother’s doctor says it is difficult to estimate her mother’s life expectancy but indicates that, with proper care, some Alzheimer’s patients can live 10 or more years after diagnosis. Felicityalso estimates that her own personal final expenses would be around $5,000, and she’d like to provide a $25,000 contingency fund that would be used to pay a trusted friend to supervise her mother’s care if Felicity were no longer alive. Use Worksheet 8.1 to calculate Felicity’s total life insurance requirements, and recommend the type of policy that she should buy.
Sophie Lopez is a 72-year-old widow who has recently been diagnosed with Alzheimer’s disease. She has limited financial assets of her own and has been living with her daughter Felicity for two years. Her income is $850
a month in Social Security survivor’s benefits. Felicity wants to make sure
that her mother will be taken care of if Felicity should die prematurely. Felicity, 40, is single and earns $55,000 a year as a human resources manager for a small manufacturing firm. She owns a condo with a current market value of $100,000 and has a $70,000 mortgage. Other debts
include a $5,000 auto loan and $500 in various credit card balances. Her 401(k) plan has a current balance of $24,500, and she keeps $7,500 in a
and medical costs during this time. After that, Felicity’s mother will probably need nursing home care. Felicity calls several local nursing homes and finds that it will cost about $5,000 a month when her mother enters a nursing home. Her mother’s doctor says it is difficult to estimate her mother’s life expectancy but indicates that, with proper care, some Alzheimer’s patients can live 10 or more years after diagnosis. Felicity
also estimates that her own personal final expenses would be around $5,000, and she’d like to provide a $25,000 contingency fund that would be used to pay a trusted friend to supervise her mother’s care if Felicity were no longer alive. Use Worksheet 8.1 to calculate Felicity’s total life insurance requirements, and recommend the type of policy that she should buy.
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