Managing your personal finance Case Study Example | Topics and Well Written Essays - 750 words

Managing your personal finance - Case Study Example Belle is risk-adverse thus holds about$60,000 in savings account which can be used to provide allowances to her parents for 60 months if $1,000 is paid every month; and $110,000 in 1 year fixed-deposit that could be used to cover the outstanding balance on loan which is $605,230. The mortgage is charged at 1.5 percent fixed for 25 years. Her mortgage covers critical illness or permanent disability at premium of $3,359 pa. In the event she passes, the $1,500,000 Term plan and $600,000 critical illness benefits cover Kenji and Karen’s educational requirements. This is because, the total educational expenses are about S$25,000 today and when factoring 6 percent inflation rate in next four years, this amount will be equivalent to S$31,561.92 [that is, 25000x(1+0.06)4]. It is also given in the case that Belle has been advised to keep aside ‘Emergency’ expenses (3 times her monthly gross income or about 4,500,000) that will provide immediate money to her children. In ad dition, the limited-pay whole life plan covering Critical Illness upto $50,000 has cash value $48,750 at premium of $19,500 pa that will give her tax benefits. (b) In the event that Belle passes on without making any formal arrangement (as discussed in (a) above) to pass on her estate, how will her estate then be distributed. Explain with relevant references. Belle has recently discovered lumps on her breast which she suspects could be early signs of breast cancer. As she is risk-adverse, Belle decided to buy Term plan worth $1,500,000 including $600,000 Critical Illness benefits that will benefit her offspring in the event she dies of cancer (critical illness). The plan is covered till age of 99 and she is presently 42 years old and only requires $14,604 outlay per year. Belle is 42 years old and is currently employed as Marketing Director of a multinational corporation that requires frequent travels