Using the Information Provided in the Previous Question, Ms

question 30

Essay

Using the information provided in the previous question, Ms. Maryanne To is uncertain as to whether the 25 year term will be sufficient to meet the financial needs of her dependants given that her youngest daughter has a disability.
a) Calculate the life insurance cover required (to the nearest $'000) assuming that the payments would continue indefinitely and that Maryanne's financial dependants would withdraw their income requirements on an annual basis in arrears after receiving an initial payment of $100,000 upon her death.
b) What difference would it make to your calculations in part a) of this question if the earnings rate was increased to 8%? Why would such difference be expected?

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Definitions:

Arthropods

Arthropods are a large phylum of invertebrate animals characterized by their exoskeleton, segmented body, and jointed appendages, including insects, arachnids, crustaceans, and myriapods.

Exoskeleton

An external skeleton that supports and protects an animal's body, common in arthropods like insects and crustaceans.

Insect Flight Muscles

Specialized muscles in insects that provide the power for flight, capable of extremely fast contractions.

Collagen Fibers

Strong and flexible proteins that form the main component of connective tissue, giving support and structure to skin, bones, and other tissues.