Study session 5 - reading 12 -life insurance needs. Exhibit 11- in the needs analysis example on p:437, the final conclusion is that the family needs 1.5m of life insurance but that Jacques should buy an additional 1.25m of insurance as he already has 250k now. However in the example under the cash available portion, the life insurance of 250k is already considered. So shouldn’t he technically need to go get 1.5m of insurance? Is there something im missing?
My apologies CPK123, i couldn’t explain myself clearly last night.
Essentially it is basically like SAM mentioned, in the example the 250K of life insurance is already included in the Total Capital available. The 1.5M is net of the 250k already on hand, so there is still a lack of 1.5M for the family. However the example mentions 1.25M. Thus double counting the 250K…
Is this a mistake or i am seeing this from a wrong perspective? anyone else? if not there is a mistake in the curriculum.
The life insurance need of €1,500,000 is described as “total financial needs less total capital available”. As the €250,000 in life insurance already owned _ is included in total capital available _, Jacques needs to purchase an additional €1,500,000; the answer of €1,250,000 is incorrect.