1) Write a 175- to 350-word response to Case 6 on p. 317 in Ch. 10 of Personal Finance.
CASE 6 An
Argument About the Value of Insurance You have been talking at a party to some
friends about insurance. One young married couple in the group believes that
insurance is almost always a real waste of money. They argue, “The odds of most
bad events occurring are so low that you don’t need to worry.” Furthermore,
they say, “Buying insurance is like pouring money down a hole; you rarely have
anything to show for it in the end.” Based on what you have learned from this
chapter, how might you argue against this couple’s point of view?
2) Complete “Do the Math”, #2 on p. 344 in Ch. 11 of Personal Finance.
2. Health Care
Event Protection. Christina Haley of San Marcos, Texas, age 57, recently
suffered a stroke. She was in intensive care for 3 days and was hospitalized
for 10 more days. Her total bill for this care was $125,500. After being
discharged from the hospital, she spent 25 days in a nursing home at a cost of
$170 per day. Christina, who earns $4,500 per month, missed two months of work.
Christina had a health insurance plan through her employer. The policy had a
$1000 deductible and an 80/20 coinsurance clause with a $2000 coinsurance cap.
She had also accumulated 21 sick days (equivalent to one month) at work.
Otherwise she had no long-term care or disability income insurance.
(a) How much of
Christina’s direct medical expenses was paid by her insurance policy?
(b) What did
Christina have to pay for her nursing home care?
(c) How much
income did Christina lose?
3) Complete #1, “Calculating Life Insurance Need”, on p. 376 in Ch. 12 of Personal Finance.
Calculating Life Insurance Need. Review the material in “How Much Life
Insurance Do You Need?” on pages 351–354. Then using dollar amounts that fit
your personal situation, complete Worksheet 48: Determining My Life Insurance
Needs from “My Personal Financial Planner.” If you are currently single and
childless, for the purposes of this activity, assume that you are 30 years old,
have two children under age 5, are married, and earn $60,000 per year and redo
the estimate of need. How would having a family change your need for life