 Personal finance practice problem using OneNote. Simple life insurance calculation for a couple with no kids. Prepare to get financially fit by practicing personal finance. You're not required to, but if you have access to OneNote, would like to follow along. We're in the icon on the left-hand side, practice problems tab in the 10020 simple life insurance calculation for a couple with no kids tab. Also, take a look at the immersive reader tool. The practice problems are typically in the text area too with the same number, same name, but with transcripts. Transcripts that can be translated into multiple languages either listened to or read in them. Information's on the left-hand side. We wanna calculate how much life insurance we need. Noting that in prior presentations, we looked at online calculators often offered by insurance companies online. And we saw that they asked for different data input and they give us different results which should not be surprising given the fact that we can approach this calculation from many different angles. So what we wanna do is understand the different tools that can be used for different situations, apply the proper tools we think are most appropriate to our situation, possibly using the online calculators to double check our calculations. Here we're looking at a specific situation where we have a couple, but there's no kids currently and they're not planning on having any kids in the future. If kids are involved, that's gonna complicate the calculation of course because usually if you're in like a family unit, one of the spouses is more likely to spend more time on the childcare, the other spouse is gonna be more likely earning or spending more time on the earning side of things. So you have that kind of scenario. But if you have two individuals that are together and they're commingling some of, for example, their debt but they don't have any kids involved, then in that particular situation, you might have a more simplified kind of calculation for the life insurance. So we're specific to that situation. So we've got spouse number one, we're gonna say 73,000, spouse number two, 73,000. So in this situation, you've got two individuals who are possibly both, of course, working and earning in that situation and they don't have either of them really basically sacrificing more or less of their time for the childcare component if there's no kids involved. What could happen still, of course, is those two individuals will take on financial, start to commingle their finances and that kind of thing. And that would include stuff like the debt, which the big debt would be the mortgage. So you might have a couple that have this mortgage that they own and those debts are the kind of thing that you're kind of responsible for, right? So you're not responsible in that case for the childcare going forward. But if you have a debt, if you were to pass away or something like that, you'd like to take care of at least your half of basically the debt would be kind of the idea. So we've got the home mortgage, got could have car loans, personal debt, credit card debt, and then funeral expenses to take care of as well. So a simplified calculation in that scenario, assuming you're basically splitting everything, 50, 50 and so on might be that you've got the debt, let's calculate or add up the debt. We've got the mortgage, we've got the car loans, we've got the personal debt, we've got the credit card loans, and that adds up to the 199,000. And then we'll simply divide that by two, saying that we have half of our debt that we're gonna be taking care of. That's what basically we're responsible for here. And then we're gonna say that we also have our funeral expenses that if we're gonna tack on the funeral expenses that are gonna be needed if we were to die would be the 8,300. So the 99,500 plus the 8,300 would be the 107,800. And that would be just like a quick, easy calculation assuming basically you have two people, no kids, they basically split everything evenly, but they've commingled their finances and they have, especially the debt that's gonna be taken care of and you would like the debt to not be burdening someone else or the partner if you were to pass away. Now note, we could get into more detailed calculations from here, this is another kind of simplified method, but you can kind of visualize what the approach is here on what's trying to happen. Note that if you were to purchase something like term life insurance, you might be saying, well look, if the mortgage is the main component here, I would expect that to go down over time. So you might also think about the timeframe on how long you're gonna need this, how long is the mortgage gonna last? And you could try to get like a term insurance that decreases over time as you pay off the mortgage. So that's one thing or one added kind of thought process you could put in here. In other words, if you come to this life insurance here and you're saying that's still kind of high, it's probably higher than maybe you totally need because one, the mortgage will be going down over time. So you might be able to get a term life insurance that goes down with the mortgage as it declines. And you also might be saying, well, if they get that money in one lump sum amount, then they only need to spend the immediate amount of the 8,300, they could invest some of it still. And then if they were to invest it and get a return on it, how much would they need to pay off, to cover, to pay off the mortgage payments and so on? So in this case, basically you're kind of calculating how much they would need in order to pay off your half of the debt entirely at the point of death. But you could try to figure out how much they would need in order to basically pay off the cash flow needs, basically on the mortgage going forward if they got a lump sum amount at the point of death. So we'll talk about those kind of calculations a little bit more, some time value of money methods more in the future. And you can tack those onto something like this, the general idea that if you're in a situation or advise in a situation where you have a couple and there's no kids involved, it might be a little bit more simplified because you have two basically independent people that could still have their earning potential is solid and so on. And they're not having their time that's going to the childcare, even if one of the spouses were to die, but you still got that commingled kind of mortgage situation. And then you can take that idea and tack on other components to it if you so choose, such as time value of money kind of components, thinking about the term life insurance declining over time possibly with the mortgage, and then you could possibly have other costs that you would think about that you would need to tack onto it like if you wanted to help with retirement or something like that. And we'll talk about those calculations in future presentations.