AN INSURANCE PLANNING MINI-CASE / TUTORIALOUTLET DOT COM AN INSURANCE PLANNING MINI-CASE / TUTORIALOUTLET D | Page 5

working at age 60 and begin
taking early retirement survivor benefits (if available).
For conservative planning purposes, the Butterfields do not plan on
using interest and/or dividends
as an income source when planning insurance needs.
At full retirement (i.e., at age 67) John will receive $18,000 per year
in Social Security benefits;
Haley will receive $16,500 in benefits (in today’s dollars).
Assumed ages at death for John and Haley are 90 and 92,
respectively.
The assumed gross rate of return on insurance assets, in the event of
death, is 9%.
Health. The Butterfields’ health insurance is provided by Blue
Cross/Blue Shield. The monthly premium of
$600 is paid 66% by John’s employer, with the remainder paid out of
pocket. The plan has a deductible of
$250 per person and a family copayment of 20%. The out-of-pocket
per-family cap on copayments is
$1,000 per year. The lifetime maximum on major medical is $500,000
per person.
Long-term care. None.
Disability. John’s disability coverage is a group disability contract
provided by his employer. It pays a
$5,000 monthly benefit until age 65. The contract has a liberal “own
occupation” definition. The elimination
period is 120 days. Haley does not have a disability policy. In the
event of a disability, the Butterfields
would like to continue saving for other goals; however, they do not
want to rely on Social Security
disability benefits when estimating disability income needs.
Vacation/medical leave. John has accumulated 30 sick days, which is
the maximum he is allowed to carry.
He could accrue one week per year if he fell below the maximum. He
also is eligible for three weeks of
vacation per year. He can carry over one week, but this has not
previously been done. Education Funding Goals
The Butterfields would like to assume that education expenses will