Question

jim and jackie are married with three children at home and a mortgage. jim’s net pay per year is $67,000 and jackie does not have income. their mortgage payment of $2,800 includes insurance on their home. they have additional monthly expenses of $2,700. jim contributes 15% of his earnings to a retirement fund and they have $5,000 in savings. there is a $500,000 life insurance policy on jim and a $100,000 policy on jackie. as their financial advisor, what part of jim and jackie’s financial plan would you encourage them to work on? a. they should work on their plan for managing income. b. they should work on their plan for managing liquidity. c. they should work on their plan for protecting their assets. d. they should work on their plan for protecting their income. please select the best answer from the choices provided

Explanation:

Jim is the breadwinner (Jackie has no income), and they have life insurance, but the focus here is on protecting their income. Since Jackie has no income, protecting Jim's income (which supports the family) is crucial. Option d is about protecting their income, which is the most relevant as their financial stability relies on Jim's income, and they need a plan to ensure that if something happens to Jim (income loss), they are protected. Options a and b are about managing income/liquidity, but the key issue here is protection, not management. Option c is about assets, but the primary concern is income protection.

Answer:

d. They should work on their plan for protecting their income.