Karen and Dave King are a two-income couple in their earlythirties. They have two children, ages 6 and 3. Dave’s monthlytake-home pay is $1,800, and Karen’s is $2,100. The Kings feel thatbecause they are a two-income family, they both should haveadequate life insurance coverage. Accordingly, they are presentlytrying to decide how much life insurance each one of themneeds.

To begin with, they would like to set up an education fund fortheir children in the amount of $80,000 to provide college funds of$10,000 a year – in today’s dollars – for four years for eachchild. Moreover, in the event of either one of their deaths, theywant the surviving spouse to have the funds to pay off alloutstanding debts, including the $140,000 mortgage on their house.They estimate that they have $15,000 in consumer installment loansand credit cards. They also project that if either of them dies,the other probably will be left with about $10,000 in final estateand burial expenses.

As far as their annual income needs are concerned, Dave andKaren both feel very strongly that each should have enoughinsurance to replace their respective current income levels untilthe youngest child turns 18 (a period of 15 years). Though neitherDave nor Karen would be eligible for social security survivor’sbenefits because they both intend to continue working, bothchildren would qualify, in the (combined) amount of around $1,400 amonth. The Kings have amassed about $75,000 in investments, andthey have a decreasing-term life policy on each other in the amountof $85,000, which would be used to partially pay off the mortgage.Further, Dave has a $60,000 group policy at work and Karen a$90,000 group policy.

Complete Life Insurance Needs Worksheet for Karen &Dave King.

Use separate worksheets for Dave (where Karen is the survivor)and Karen (Dave is the survivor).