The Michels family is by all means an average middle-class family with a working debt to income ratio that is not substantially weighed in one direction or the other in terms of the amount of income earned each month contrasted by the amount of outgoing debt each month. In consideration of their current financial standing, the size and necessity consumption by their family of three, and future regard for their young son, Pierre; the Michel’s lifestyle analysis would adequately pre-qualify for consideration toward the incurrence of a full-coverage insurance package based on several differentiating factors. As Jacques is the head of the household, and the current sole-income/wage earner, his life insurance policy would be more suitably allocated:
The chart above depicts the Michel’s financial needs, considering the loss of Jacques’ sole income earnings over the period of their financed mortgage loan – 30 years. The Income replacement reflects Jacques Michel’s current gross income amount calculated over the loan term, but does not account for inflation, income promotion, or any other potentially positive or adverse impact on their financial situation. The amounts are also relatively frugal in terms of allocating necessary funds for their son’s hopeful education, final expenses if deemed the reason for collection, and estimation of value given to assets such as their current automobiles. In total consideration of safe insuring policy, the chart represents a worst case scenario of financial coverage currently necessary to maintain the integrity of the family’s financial stability and overall sustainability. Based on the Michel’s inability to liquidate assets, as they lay mostly in equity; this factor and their risk consideration and the potential for calamity substantiates the following 30 Year Term and Universal Life, Home and Auto Insurance Package. These plans are all subject to circumstantial refinance and appropriated adjustment. As the above chart portrays an overly secure amount, the Michel’s have opted for a policy at approximately 50 percent of their Additional Life Insurance Needed, which equates to about $1.6 million, and further offset by the cost of auto, life and home coverage.
The package price presents a significant discount for the Michel’s family in consideration of their overall insurance needs and precautionary regards. The incurrence of this financial obligation should note overly offset their monthly debt to income ratios as to begin declining their current financial situation. Rather, the security provided through the insurance package may prove more settling than the lack thereof.