Question

You are a dual income, no kids family. You and your spouse have the following debts (total): mortgage, $200,000; auto loan, $9600; credit card balance, $2200; and personal debts of $5300. Further, you estimate that your funeral will cost $4400. Your spouse expects to continue to work after your death. Using the DINK method, what does your life insurance need?

Answer 1

The life insurance need is $112950

Solution:

Given that,

Mortgage =
`\$200000`

Auto loan =
`\$9600`

Credit card balance =
`\$2200`

Personal debts =
`\$5300`

Funeral expenses =
`\$4400`

To find the life insurance needs using DINK method, we have use the following formula,

`\Rightarrow\text { funeral expensss }+\left[(1)/(2) * \text { (mortgage }+\text { auto loan }+\text { credit card balance }+\text { other debts }\right]`

On substituting the values we get,

`\Rightarrow4400+(1)/(2)*(200000+9600+2200+5300)=4400+(1)/(2)*217100`

`\Rightarrow4400+(217100)/(2)=4400+108550=112950`

The term DINK stands for Double Income, No Kids. This method has you adding half of all your debts plus funeral expenses.