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Risk Management Case Study 1

Discussion in 'Financial Planning Study Group' started by micdan, 1st Jul, 2010.

  1. micdan

    micdan Active Member

    24th Feb, 2010
    I am slowly working my way through this assignment. In Case study 1 Simone leases a Mercedes, but I am unsure as to how the lease were to be treated if she were to die?
    I am also experiencing difficulty with the fact that Simone does not appear to have a shortfall after deduction of the living expenses and unpaid spouse duties.
    Any guidance would be appreciated.
  2. CJ. Wentworth

    CJ. Wentworth Well-Known Member

    9th Mar, 2008
    Cairns, QLD
    Hi Mic, if you are who I think you are then I've replied to your email.

    In either case, I think that in the event of a claim, Simone would no longer require the Mercedes. She could stop leasing it until she is able to work again, lease a cheaper car, buy a cheaper car, etc. Otherwise she would have to increase the lump sum insured to cover the $1,100 per month.

    Unless the assignment is different from mine, Simone has a rather hefty shortfall.

    Income: $145,000 (not incl. bonus)

    Mother Allowance: $4800
    Mercedes: $13,200
    Household: $36,000
    IP Repayments: $30,000
    Rates, B/C: $4,200

    Total: $88,200 (depending on how you read it, Kaplan states living expenses twice $36,000)

    $145,000 - $88,200 = $56,800

    I know I'm ignoring tax, but I'm also ignoring rent from her IP.