Your clients, Jamal and Chyna Gwynn, would like you to estimate their life insurance needs based on a comprehensive needs analysis. Their son, Jarius, is currently 13 years of age. Jamal and Chyna have high hopes for Jarius’s future education. They would like to accumulate a $240,000 (in today’s dollars) educational savings fund to pay for four years of college. In event of Jamal’s or Chyna’s passing, they will need $10,000 in transitional child care expenses. When making your estimate, the Gwynns would like to pay off all debt and liabilities at the death of the first spouse. Use the following information to determine the life insurance need for Jamal and Chyna separately:

•Jamal: Age forty eight; Life Expectancy: Age ninety seven
•Chyna: Age fifty; Life Expectancy: Age nine five
•Desired Retirement Age: Age sixty two
•Full Retirement Age: Age sixty seven
•Earned Income: Jamal $145,000
•Earned Income: Chyna $210,000
•Bonus: Jamal $25,000
•Investment Rate of Return: 7.90 Percent
•Inflation Rate Assumption: 3.00 Percent
•Marginal Federal and State Marginal Tax Rate Before Retirement: 29 Percent
•Marginal Federal and State Marginal Tax Rate After Retirement: 29 Percent
•Final Expenses: Jamal and Chyna $40,000 Each
•Estate Administration: Jamal and Chyna $12,000 Each
•Other Final Needs/Expenses: Jamal and Chyna $20,000 Each
•Jointly Held Credit Card Debt: $45,000
•Jointly Held Installment Debt: $82,000
•Jointly Held Automobile Debt: $19,000
•Jointly Held Mortgage Debt: $345,000
•Jointly Held Other Debt: $190,000
•Transitional Child Care Expenses: $10,000 Each
•Household Expenses Needed in Event of Death: $296,000 Each
•Capital Retention Replacement Ratio: 80 Percent
•Expense Reduction Ratio While Jarius is at Home: 100 Percent
•Social Security Benefits While Jarius is at Home: $0
•Expense Reduction Ratio After Jarius Leaves Home but Survivor Turns Age sixty: 80 Percent
•Social Security Benefits After Jarius Leaves Home but Survivor Turns Age sixty: 80 Percent
•Income Needed from Age sixty to Full Retirement: $190,000 Each
•Income Need While Retired: $190,000 Each
•Social Security Benefit of Survivor: Jamal $42,000
•Social Security Benefit of Survivor: Chyna $39,000
•Other Income in Retirement: $80,000 Each
•In-force Cash Value Life Insurance: Jamal $300,000
•In-force Term and Cash Value Life Insurance: Chyna $500,000
•Combined Retirement Assets: $1,500,000
•Combined Other Savings: $200,000
•Other Assets: $0

a. Approximately how much additional life insurance does Jamal need?
b. Approximately how much additional life insurance does Chyna need?
c. How do these estimates compare to the need from the human life value approach? What helps explain the difference?