| Course | GF591 Individual Insurance Planning |
|---|---|
| Unit | Unit 3 |
| Paper type | Life needs calculation |
| Length | About 870 words, 6 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | MS in Finance |
| Updated | October 2026 |
Free sample paper for GF591 Unit 3
Two Methods, One Shortfall: A Unit 3 Life Needs Calculation for a Practice-Owning Endodontist
[Student Name]
Purdue University Global
GF591: Individual Insurance Planning
Unit 3 Life Needs Calculation
[Instructor Name]
[Date]
The household, its spending, benefits and resources are composite and illustrative; survivor benefit figures are estimates of the kind a statement would supply; the sources cited are real.
Assumptions
Every later figure points back to this list.
1. A real discount rate of 2 percent, meaning returns after inflation.
2. Education costs grow at the same rate the education fund earns, so today's cost is today's need.
3. Survivor household spending of $138,000 a year while both children are home, $132,000 with one child and $118,000 after both leave.
4. The surviving spouse's take-home pay of about $91,000 a year continues until he retires at 67, in 21 years.
5. Social Security child survivor benefits of about $43,800 a year for both children together, half that once the older child turns 18, ending when the younger turns 18. The estimate comes from her Social Security statement (Social Security Administration, 2025).
6. Payments needed at the start of each year.
Capital Needs: Lump Sums
1. Final costs, including funeral and estate settlement: $35,000.
2. Mortgage payoff: $412,000.
3. Readjustment fund for the first year: $50,000.
4. Education for both children after their 529 balances: $170,000.
Lump sums total $667,000.
Capital Needs: Income in Three Periods
Child benefits end in stages, so the income need changes twice.
1. Years 1 to 3, both children home. Spending of $138,000 less his take-home pay and $43,800 of benefits leaves a gap of about $3,200 a year.
2. Years 4 to 7, one child home. Spending of $132,000 less his pay and $21,900 of benefits leaves about $19,100 a year.
3. Years 8 to 21, children grown. Spending of $118,000 less his pay leaves about $27,000 a year.
Each period is discounted from its own start year. Together the gaps are worth $369,567 today.
Capital Needs: Retirement Contributions
She contributes $36,000 a year to her solo retirement plan. If she died, those contributions would stop, and the surviving spouse's retirement would be smaller. Replacing them for 21 years is worth $624,652 today.
Total capital needed is $1,661,218: $667,000 of lump sums, $369,567 of income gaps and $624,652 of lost retirement saving, each line traceable to an assumption above.
Human Life Value
The second method asks what her future earnings are worth to the family, regardless of what the family would spend. Her after-tax earnings, less her own consumption, are about $151,164 a year. Growing at 3 percent and discounted at 5 percent until age 65, they are worth $2,511,299 today.
This figure is larger than capital needs because it counts every dollar she would have earned, including amounts the family would have saved or spent on things it could live without.
Resources
1. The existing $1,000,000 term policy counts in full.
2. The $180,000 brokerage account counts, since it is liquid and not earmarked.
3. Retirement accounts do not count. They are the surviving spouse's own retirement, and spending them now would reopen the gap later.
4. The $64,000 cash reserve does not count. The readjustment fund already serves that purpose, and the reserve stays for emergencies.
Resources total $1,180,000. The shortfall under capital needs is $481,218. Under human life value, it would be $1,331,299.
How Sensitive the Answer Is
The discount rate is the assumption most likely to be questioned, so the schedule was rerun at two other rates. At a 1 percent real rate, the total need rises to about $1,765,956 and the shortfall to about $585,956. At 3 percent, the need falls to about $1,570,261 and the shortfall to about $390,261. The lump sums do not change with the rate, because they would be paid at once; only the income gaps and the lost retirement contributions move. Across that range the household is short by roughly $390,000 to $586,000, so a new policy of about $500,000 covers the central case and most of the range. Spending assumptions matter too: every $10,000 a year of lower survivor spending in the last period cuts the need by about $107,500, which is why the spending figures were built from the couple's own cash flow statement rather than a rule of thumb.
Which Method Governs
Capital needs governs for this household. Its obligations are defined and dated: a known mortgage, two children with known ages and a stated college goal, and a spouse with steady income. Capital needs measures what the family would actually require. Human life value is useful as a ceiling, showing the most that insurers would issue and what the family could lose in the widest sense (Black et al., 2015). Research on households' actual coverage finds that many hold amounts unrelated to either measure, which is the reason to calculate rather than guess (Bernheim et al., 2003).
A Date to Watch
The existing term policy expires in ten years, when she is 54. At that point the younger child will be 21 and the mortgage much smaller, so the need will have fallen, but it will not be zero. The plan should recalculate the need before the policy ends.
References
Bernheim, B. D., Forni, L., Gokhale, J., & Kotlikoff, L. J. (2003). The mismatch between life insurance holdings and financial vulnerabilities: Evidence from the Health and Retirement Study. American Economic Review, 93(1), 354-365. https://doi.org/10.1257/000282803321455340
Black, K., Jr., Skipper, H. D., & Black, K., III. (2015). Life insurance (15th ed.). Lucretian.
Social Security Administration. (2025). Survivors benefits (Publication No. 05-10084). https://www.ssa.gov/pubs/EN-05-10084.pdf
GF591 Unit 3 instructions, in plain terms
Unit 3 of GF591 asks how much life insurance one earner needs, using two methods. List assumptions once: the discount rate, how education costs grow, survivor spending in each period, the surviving spouse's income and any survivor benefits with their source. Build capital needs in order: lump sums, then income gaps by period, each discounted from its own start year, then any lost retirement contributions. Compute human life value separately from after-tax earnings net of the earner's own consumption. List resources with a rule for each, explaining why some assets count and others do not. State the shortfall under each method, then defend the method that should govern for this household. Test the result against the discount rate. Note when existing coverage expires. Cite life insurance texts and research in APA 7.
How this GF591 Unit 3 example is built
Six numbered assumptions open the calculation, with survivor benefits estimated from her statement and cited to the Social Security Administration. Four lump sums total $667,000. Income gaps of about $3,200, $19,100 and $27,000 a year follow in three periods, then $36,000 a year of retirement contributions. The highlighted total of $1,661,218 lists its three parts. A human life value page computes $2,511,299 from $151,164 a year grown at 3 percent and discounted at 5. Resources count the $1,000,000 term policy and $180,000 brokerage account but not retirement accounts or the reserve. A sensitivity section reruns the schedule at 1 and 3 percent. A defense of capital needs cites Black and colleagues and Bernheim and colleagues, and a note on the policy's expiry at 54 closes the paper.
GF591 Unit 3 rubric: what earns full points
The GF591 rubric for needs calculations gives its first points to assumptions stated once and used consistently. Most of the analytical weight then sits on a capital needs schedule laid out so any line can be recomputed: lump sums, income periods discounted from their own start years, and lost retirement saving. Graders reward resources listed with a rule for each, since counting a reserve or retirement account twice is a common error. Computing human life value separately and explaining why it differs shows command of both methods. Instructors in the MS in Finance program value a defense of the governing method tied to this household's facts and a sensitivity test on the discount rate. Black and colleagues, Bernheim's team and the SSA survivors booklet give the calculation its sources.
GF591 Unit 3 help from the desk
Many GF591 Unit 3 calculations stop at a multiple of income, which ignores the mortgage, the children's ages and existing cover. Others treat survivor income as one long period, so the end of child benefits never shows. Lost retirement contributions are forgotten. Retirement accounts and cash reserves are counted as resources, which robs the survivor's future to fill today's gap. Human life value is mentioned in a footnote rather than computed. The method choice is asserted rather than defended. Expiry dates on existing policies are missed. If your case gives a different earner or family, keep the order: assumptions, lump sums, income periods, retirement contributions, human life value, resources with rules, both shortfalls, a defense of method, a sensitivity test and the date when coverage changes.
Get a GF591 Unit 3 example written to your instructions
Provide the family facts, existing policies and any survivor benefit estimates from the GF591 Unit 3 case, plus any method the prompt requires. A custom calculation runs both methods, shows each assumption, counts resources by a stated rule and defends the figure it chooses. First sample free of charge; allow 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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GF591 Unit 3 questions, answered
Which discount rate belongs in a life needs calculation?
A real rate, if income needs are stated in today's dollars, because inflation has already been removed from the payments. The sample uses 2 percent real, roughly a 5 percent return less 3 percent inflation. Some sections supply the rate; use theirs if so. Whatever the choice, apply it consistently and add a sentence on how the need moves if the rate does.
Should Social Security survivor benefits be included?
Usually, when the deceased had covered earnings, but as bracketed estimates with a source, since actual amounts depend on the earnings record. The sample includes child benefits only, ending as each child turns 18, and leaves out a benefit for the surviving spouse because his salary would reduce it under the earnings test at his age.
Why not simply use ten times income?
Because a multiple ignores everything the course is asking about: the mortgage, the children's ages, existing cover and when that cover ends. Ten times this practice owner's income is 2,850,000, far above the capital needs result and above human life value too. A rule of thumb can appear as a cross-check, but graders expect the calculation to stand on its own.
Where can I find a free GF591 Unit 3 sample paper?
You can read a complete GF591 Unit 3 life needs calculation for an endodontist here, with capital needs, human life value, resources with rules, a $481,218 shortfall, a sensitivity test and APA 7 references.
Why are retirement accounts left out of resources?
They belong to the surviving spouse's own retirement. Spending them to cover today's gap would leave him short later, so the calculation keeps them aside and counts only the term policy and the brokerage account.