Question

You are a dual income, no kids family. You and your spouse have the following debts (total): mortgage, $180,000; auto loan, $10,000; credit card balance, $2,000; and other debts of $6,000. Further, you estimate that your funeral will cost $4,000. Your spouse expects to continue to work after your death. Using the DINK method, what should be your need for life insurance?

Answer 1

Answer:

$106,000

Explanation:

Data provided in the question:

Mortgage = $180,000

Auto loan = $10,000

Credit card balance = $2,000

Other debts = $6,000

Funeral cost = $4,000

Now,

In the DINK method

the insurance need is based on one-half of most debts and  includes 100% of "other debts" and the funeral cost.

thus,

Total insurance need

= [ ( Mortgage + Auto loan + Credit card balance) ÷ 2 ] + Other debts + Funeral cost

= [ $180,000 +  $10,000 +  $2,000 ) ÷ 2 ] + $6,000 + $4,000

= $96,000 + $6,000 + $4,000

= $106,000