Economic Loss Evaluation
And Life Insurance
Need
Economic Loss - Death of Client
| Death at Age |
Gross Earnings (1) |
Fringe Benefits (2) |
Household Services (3) |
Taxes & Consumption (4) |
Net Loss (5) |
PV of Net Ecoconomic Loss (6) |
| 19 |
12,360 |
3,605 |
6,180 |
18,540 |
3,605 |
1,450,000 |
| 20 |
12,731 |
3,713 |
6,365 |
19,096 |
3,713 |
1,525,000 |
| 21 |
13,113 |
3,825 |
6,556 |
19,669 |
3,825 |
1,600,000 |
| 22 |
13,506 |
3,939 |
6,753 |
20,259 |
3,939 |
1,723,000 |
| 23 |
13,911 |
4,057 |
6,959 |
20,867 |
4,057 |
1,800,000 |
| 24 |
14,329 |
4,179 |
7,164 |
21,493 |
4,179 |
1,885,000 |
| 25 |
14,758 |
4,305 |
7,379 |
22,138 |
4,305 |
1,900,000 |
| 26 |
15,201 |
4,434 |
7,601 |
22,802 |
4,434 |
2,000,000 |
| 27 |
15,657 |
4,567 |
7,829 |
23,486 |
4,567 |
2,050,000 |
| 28 |
16,127 |
4,704 |
8,063 |
24,190 |
4,704 |
2,075,000 |
| 29 |
16,611 |
4,845 |
8,305 |
24,916 |
4,845 |
2,100,000 |
| 30 |
17,109 |
4,990 |
8,555 |
25,644 |
4,990 |
2,125,000 |
| 31 |
17,622 |
5,140 |
8,811 |
26,434 |
5,140 |
2,130,000 |
| 32 |
18,151 |
5,294 |
9,076 |
27,227 |
5,294 |
2,125,000 |
| 33 |
18,696 |
5,453 |
9,348 |
28,043 |
5,453 |
2,100,000 |
| 34 |
19,256 |
5,616 |
9,628 |
28,885 |
5,616 |
2,076,500 |
| 35 |
19,834 |
5,785 |
9,917 |
29,751 |
5,785 |
2,050,991 |
| 36 |
20,429 |
5,959 |
10,215 |
30,644 |
5,959 |
2,023,756 |
| 37 |
21,042 |
6,137 |
10,521 |
31,563 |
6,137 |
2,005,000 |
| 38 |
21,673 |
6,321 |
10,837 |
32,510 |
6,321 |
1,999,996 |
| 39 |
22,324 |
6,511 |
11,162 |
33,485 |
6,511 |
1,854,331 |
| 40 |
22,993 |
6,706 |
11,497 |
34,490 |
6,706 |
1,735,921 |
| 41 |
23,683 |
6,908 |
11,842 |
35,525 |
6,908 |
1,650,000 |
| 42 |
24,394 |
7,115 |
12,197 |
36,590 |
7,115 |
1,648,723 |
| 43 |
25,125 |
7,328 |
12,563 |
37,688 |
7,328 |
1,635,609 |
| 44 |
25,879 |
7,548 |
12,940 |
38,819 |
7,548 |
1,628,750 |
| 45 |
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(1) GROSS EARNINGS - Projected using an age-earnings profile
based on U.S. Census data,
calibrated to broad occupation class, age and current earnings.
The use of age-earnings
profiles is the standard within the economics literature when it
comes to the earnings of
an individual over time. In fact, their formulation has been
referred to as "the most
widely used in economics."
(2) FRINGE BENEFITS - A constant percentage (15.5%) of
projected earnings is used by
this application, disregarding benefits provided by spouse.
(3) HOUSEHOLD SERVICES - This indicates the average number of
hours per week that the
individual spends performing household services. This application
will assume that the
hours the two spouses on average work around the house each are
equal, and are between 6
and 14 hours. These hours are converted to dollar values using
wage rates for domestic
workers.
(4) TAXES & CONSUMPTION - Assumes set rates for taxes.
Consumption assumed to be
25% of after-tax income. This application disregards spouse's age
difference, any spousal
earnings and dependents' consumption.
(5) NET LOSS - The sum of (1), (2), and (3) less (4). This is
the projected net
contributions if living, but it becomes the net loss after
death.
(6) PV OF NET ECONOMIC LOSS - The additional capital required
at death, such that the
Net Loss following death can be replaced by the family.
Additional assumptions made for this limited analysis:
(1) Economic productivity increases at 1% annually. (2)
Inflation is 4% annually. (3)
After tax rate of return is 5.3%. (4) No income from sources
other than client's salary.
(5) No pension loss at death. (6) No additional income at death
(such as insurance or
social security benefits).
NOTE: The economic loss analysis included in this
version of FP+ includes
only limited elements of the Ph.D. Life System, and makes a
variety of simplifying
assumptions. Consequently, the above results do not necessarily
represent the actual
economic loss to your family from your death, but rather the loss
of a representative
family with a few of the characteristics of your own. As such,
the results of this
analysis is not something to which Litigation Analytics would
testify.
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