Question

Mary (32) and Bob (37) own a home (mortgage is $1800 per month, $200,000 for next 22 years), 2 cars ; a 2014 Ford Truck; a 2015 Toyota Prius with a $350 car payment per month Mary recently completed her CPA requirements and started her practice and began working from home 6 months ago (annual average salary $65,000) and Bob works as a athletic shoe designer for Skechers (annual average salary $125,000). Bob travels extensively. Mary has no life insurance and no retirement plan. Bob provides the medical benefits for the family and has a retirement plan (401K @ 125,000) through work plus life insurance equal to his annual salary. Mary and Bob have one son, a 3 year old, Bob Jr. Bob’s mother, Betsy (62) lives with them in an in-law apartment on the premises and has her own car. Mary and Bob subsidize Betsy’s medical expenses and in the last year, Mary has been her primary caregiver as Betsy has a heart problem and has been in and out of the hospital for the last six months. They have a dog name Risky.

Using the steps in the Risk Management process describe how you would determine and address/resolve the insurance needs, retirement needs, provide college savings, etc. In your answer indicate which insurance products or other tools/programs you would use/implement to ‘cover’ the risks/exposures of this family.

Answer 1

Answer:

Risk Management process – As per the risk management process, we need to review the risks for the family and their in-laws so that they can take appropriate action to cover their family’s risk, risk for their in-law and any other risk associated with them.

Mary and Bob are spouse in the family and they had one son of 3 years age.

• We need to cover life insurance for these three, so that they will be free from medical insurance need and their medical needs can be managed with the help of their medical insurance in future.
• We need to cover the insurance for their both cars, as the cars need to have the adequate insurance so that if they had any issue/accident, then they can manage the liabilities with the help of car accidents.
• Bob already has a retirement plan (401K@125,000) for himself.
• Bob‘s mother Betsy is 62 year old and lives with them in in-law location. Bob need to have her medical insurance so that her mother will be covered under medical insurance as she is already suffering with heart related issues.
• Bob’s mom has a car and that car also needs insurance. So bob to organize the insurance for her mother’s car as well.
• They have a dog, a dog also need to be insured so that they will be free from any liability if dg had any issue with any other people
• They need to have house insurance.

We need to select the below insurance products for the above needs as

• Medical insurance for the family that will cover Bob, Mary and their son.
• They need to have comprehensive insurance for their two cars and for their mother’s one car.
• They need to have third party insurance for their dog.
• They need to have retirement plan for the lady Mary.
• They need to select the suitable house insurance.