Question

you and your spouse are in good health and have reasonably secure jobs. each of you makes about $42,000 annually. you own a home with a $165,000 mortgage, and you owe $12,200 on car loans, $6,600 in personal debt, and $3,250 in credit card loans. you have no other debt. you have no plans to increase the size of your family in the near future. you estimate that funeral expenses will be $7,500. estimate your total insurance needs using the dink method.

Answer 1

To estimate insurance needs using the DINK method for a couple each earning $42,000 with debts totalling $187,050 and estimated funeral expenses of $7,500, the total insurance coverage needed is $194,550.

Step-by-step explanation:

The DINK (Dual Income, No Kids) method for calculating insurance needs takes into account the current debts and final expenses of a couple without children. To estimate total insurance needs using the DINK method for a couple with an annual income of $84,000 (two people each making $42,000), one would consider the following debts: a $165,000 mortgage, $12,200 in car loans, $6,600 in personal debt, and $3,250 in credit card debt. Additionally, estimated funeral expenses of $7,500 should be included. The calculation would result in:

• Total debts and mortgage: $165,000 + $12,200 + $6,600 + $3,250 = $187,050
• Funeral expenses: $7,500
• Total insurance need: $187,050 + $7,500 = $194,550

This total of $194,550 represents the minimum sum the insurance policies should cover to ensure that the surviving spouse is not financially strained in the event of the other's passing.