Reference no: EM132976066

Question - Linda is married, with three children, aged 12, 10, and 4. She has been advised to purchase life insurance. Linda is 40, whilst her husband is 44. Linda wants enough life insurance cover from her policy to look after her husband financially until he is 70. She also wants to buy a life insurance policy for her husband, with coverage until she is 70. It is also a good idea to provide enough cover in each respective policy for her children's specific expenses until they are all 30. The couple's expenses are $2,000 per month, whilst the monthly expense to raise each child is $400 per month (each). They have a mortgage of $270,000, and a credit card balance of $8,000. Upon death of either spouse, funeral costs will be $15,000. Estate administration costs will be $3,000. Both Linda and her husband would like to make a provision for their children's future houses of $150,000 per child. Linda has a superannuation balance of $220,000, whilst her husband has a balance of $100,000. Calculate the value of both life insurance policies separately under the needs approach.