Compare and contrast human life value and needs analysis

Reference no: EM133331547

Question: You are a financial advisor serving individual clients with limited financial literacy. John Doe is a 50-year-old single parent living in Sydney with his two children and his mother, Jane, 75. John is an engineering manager at Lendlease, and his annual salary is $150,000. He typically uses 45% of his salary to support his family. John is expected to retire at the age of 55. You have made the following assumption: - The interest rate is 3%. - The tax rate is assumed at 30%. - Annual salary and living expenses grow at 2%. - Salary and living expenses occur at the BEGINNING of the year. - The children's projected living expenses will be $20,000 per year for both children for 4 more years. You are asked to assess John's personal risk associated with premature death. We introduced two approaches: 'Human Life Value' and 'Needs Analysis' in the class. John currently has a term life policy provided by Lendlease with a death bene?t of $100,000.

(a) Based on 'Human Life Value' approach, what is the additional amount of life insurance coverage would you recommend?

(b) Compare and contrast 'Human Life Value' and 'Needs Analysis' approaches. Which approach would you recommend in John's situation?

Reference no: EM133331547

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