Final answer:
Jill and Carl should consider increasing their insurance coverage to $1,360,000 due to financial obligations like the mortgages on their primary residence and rental property, child support, income replacement, and a travel fund for their children.
Step-by-step explanation:
Based on the information provided, Jill and Carl currently have a joint first-to-die insurance policy worth $500,000. However, their financial obligations include a primary residence mortgage of $345,000, a rental property mortgage of $275,000, child support for Donnie and Marie amounting to $5,000 per year until age 19, income replacement of $20,000 for 20 years, and a travel fund of $5,000 annually for each child. To ensure their children's financial security and to cover the other mentioned expenses, it is recommended that Jill and Carl reevaluate their insurance coverage. They may need a larger policy to adequately provide for these needs.
The insurance needed can be calculated as follows: Primary residence mortgage ($345,000) + Rental property mortgage ($275,000) + Child support for both children until age 19 (2 children * $5,000/year * 17 years = $170,000) + Income replacement ($20,000/year * 20 years = $400,000) + Travel fund for both children until age 19 (2 children * $5,000/year * 17 years = $170,000). The total recommended coverage would be $1,360,000. This amount exceeds their current coverage by $860,000, indicating they may require additional insurance.