deshawn is 38 years old and is married with 3 children, ages 2, 4, and 6. he makes $45,000 a year and is…

deshawn is 38 years old and is married with 3 children, ages 2, 4, and 6. he makes $45,000 a year and is planning to retire when he turns 60. from the following three options, deshawn decides to buy the $900,000 20 year term policy. given deshawns scenario, assess whether deshawn made a wise decision. age annual life insurance premium (per $1000 of face value) 20 - year term whole life 20 - year endowment male female male female male female 38 $15.38 $14.88 $22.40 $20.04 $30.05 $29.63 a. deshawn would be safer buying whole life policy. b. deshawn would have more money in the long run if he invested in the 20 - year endowment. c. deshawns current policy will cover his family for an adequate period of time at his current salary. d. deshawns current policy has too high of a face value and does not cover his family long enough.

deshawn is 38 years old and is married with 3 children, ages 2, 4, and 6. he makes $45,000 a year and is planning to retire when he turns 60. from the following three options, deshawn decides to buy the $900,000 20 year term policy. given deshawns scenario, assess whether deshawn made a wise decision. age annual life insurance premium (per $1000 of face value) 20 - year term whole life 20 - year endowment male female male female male female 38 $15.38 $14.88 $22.40 $20.04 $30.05 $29.63 a. deshawn would be safer buying whole life policy. b. deshawn would have more money in the long run if he invested in the 20 - year endowment. c. deshawns current policy will cover his family for an adequate period of time at his current salary. d. deshawns current policy has too high of a face value and does not cover his family long enough.

Answer

Explanation:

Step1: Calculate annual premium

DeShawn is 38 - year - old male buying a 20 - year term policy. Face value is $900,000. Premium per $1000 of face value is $15.38. Number of $1000 units in $900,000 is $\frac{900000}{1000}=900$. Annual premium = $15.38\times900 = 13842$. His annual salary is $45000$, and the premium is a significant portion of his income.

Step2: Analyze policy duration

He plans to retire at 60 and the policy is a 20 - year term starting at 38, so it will end when he is 58. His children will still be relatively young at that time.

Step3: Evaluate face - value adequacy

The face value of $900,000 may be high relative to his income, and the policy doesn't cover his family until his children are fully independent.

Answer:

d. DeShawn's current policy has too high of a face value and does not cover his family long enough.