Zac and Mary Johnson
Zac and Mary Johnson are 36 and 34 respectively. Zac has recently been offered a new job as an IT engineer with a newly created software company that helps churches fully integrate their giving, attendance, and member data software where he can earn $102,000 per year. Mary currently stays home and homeschools their two children (Brayden (10) and Cora (7)) although she holds a CPA license in the state of Indiana. Zac and Mary also have two Mastiffs (Fun and Games). Zac and Mary have been married for 14 years and currently live in a rural area outside Indianapolis IN.
With great excitement, Zac and Mary have just realized that they will be expected their third child. Knowing his type A personality, Zac begins to feel anxious that he has not done an adequate job of protecting his family should something happen to him, especially with the anticipation of a third child.
Zac approaches you in your local men’s bible study and asks to meet with you regarding a review of his current insurance. He seems rather bothered by where he stands, specifically not knowing how much life insurance he really should have.
In the course of your follow-up meeting, he gives you the following information:
v Current salary: $102,000
v Annual salary increase: 3.0%
v Retirement Age: 67
v Expected inflation rate: 3%
v Final expenses: $30,000
v Income Tax bracket: 25%
v Total monthly social security benefit per child until the child reaches 18: $3200
v College education costs $25,000 per year per child in today’s dollars starting at age 18 for four years.
v Education inflation rate: 5%
v Monthly income needs for spouse until last child is age 22: $5500
v Personal Consumption: 20% of income
v Investment returns expected to be 6%
v Mortgage and debt repayment (as it stands today) is: $285,000
Questions to be solved
Using the attached information, you will analyze different products from different companies to determine a recommended strategy within the case study. The products identified in this workshop were chosen at random and are not intended to be an exclusive list of variable annuity products.
- Jackson Annuities – Elite Access Variable Annuities
- AXA Accumulator Series Variable Annuities
- MetLife FlexiChoice Annuities
Using the web, search for the specific products above and complete the following:
- Construct an excel spreadsheet that compares the three products and insurance companies.
- Make sure you evaluate the following items in your excel sheet:
a. Payout period
b. Premium options
c. Benefit options
d. Fixed, index, or variable
e. Recommended Riders
Provide Zac and Mary a summary of your findings and your recommendation in a word document.