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You are to determine and evaluate the following business, personal property and liability, and personal exposures and the methods that can be used to deal with these exposures. These methods will include insurance and other methods. Other methods that can be used to deal with your risk in addition to private insurance should be discussed as well.
For this project assume that you are working as a pharmaceutical sales rep for Flanagan Pharmaceuticals. You have been employed there for three years after two years with Braizan Pharmaceuticals. Your current salary is $63,000 per year and in each of the past two years you have qualified for a $4,000 bonus. Flanagan offers participating health and dental insurance with the employee paying 20% of the insurance cost. They also offer a 40IK plan matching your contributions of up to four per cent of your salaried compensation. There is employee paid group life and disability insurance available. The life insurance limit is up to two times your salary and disability of up to 60% of your salary.
Also assume for this project that you are married. Your spouse is an accountant working for the firm of Shannon and Murphy, LLC making $53,000 and has been employed there for five years. They have taken their CPA exam but have failed two sections of the exam. They feel confident that they will pass the last sections on their next attempt. Their employer has allowed study them study time to help in this process. Their employer offer benefits that include participating health insurance with the employee paying 20% of the health insurance cost. There is also a 40IK plan for all eligible employees at Murphy and Shannon.
In addition to both of your jobs you and your spouse have just purchased a Smoothie King franchise, Big Dog, LLC, in Metairie, Louisiana. You have four part time employees and one full time store manager. The store manager Mike Fitzpatrick has been working for the franchise since it opened six years ago and is extremely valuable to you in helping run the franchise. The store is located in a strip mall with other retail
If you are not busy enough you are expecting the birth of your second child. You already have a three- year-old daughter Ealga. Your in-laws, Jonathan and Ann O’Doul, both sixty-six years old, just retired and will be moving to the New Orleans area where their cost of living will be reduced. They just sold their home in Boston for $319,000 and had a $30,500 mortgage balance at the time of the home sale. They plan to buy a home near you in Kenner. The cost of their home in Kenner is $229,000. Though working for many years the O’Doul’s had no qualified retirement plan at work. The O’Doul’s do have a joint IRA worth $114,000.
You are considering purchasing a home located at 4221 Beaujolais Drive in Kenner, Louisiana. The house has 2,000 square feet of living area and a detached two-car garage. It is a one-story, brick veneer, slab home. It is an above average house with cathedral ceiling in the den, one fireplace, carpet in the bedrooms, hardwood floors in the dining room and den with ceramic tile floors in the wet areas. The home has three bedrooms and two and one half baths. The house was built in 1969 and is in good condition. The central electric heating and AJC system is ten years old. The roof was replaced as a result of damage from Katrina. That was the only wind damage from the storm. The house has never flooded. It has a lowest floor elevation of-2.60’, lowest adjacent grade of -2.0’, and a base flood elevation of-3.50’. It is in an AE flood zone. The purchase price is going to be $249,000 and you are going to borrow $210,000, amortized over thirty years, from a mortgage company that you have yet to choose. The house sits on a comer lot and has several 40’ tall pine trees in the rear fenced yard which will contain your trampoline, attached covered patio and hot tub, and a 10’ X 12” metal storage shed. The house has a central fire and burglar alarm for protection.
Your contents are of better than average quality. In addition to your contents you have several small pieces of jewelry worth $3,000 and a single diamond ring worth $3,500. You also have a $2,400 Dell laptop that you use in your job and your Smoothie King franchise.
You will need to select appropriate insurance limits, policy type, coverage, and deductibles based on the information provided above for the proposed dwelling purchase. Also, you may need to use some of your own personal information in your evaluation. You may have to make some assumptions about the home as you have viewed it only twice and are considering making an offer at the asking price of $249,000.
In addition to insurance, what additional methods can be used to deal with your risk concerns?
You should consider your own personal auto for this project. Remember, you may be purchasing the new home in Kenner on Beaujolais Drive. Would the purchase of your home in Kenner affect your auto policy? If so, how and why? Are there any discounts that you are receiving or should be receiving on your auto insurance policy? You must explain why you have selected the insurance coverage and deductibles that you have on your auto insurance policy as it relates to the exposures presented in this exercise. If you are on someone else’s auto policy as a driver, or do not drive, select a vehicle and treat it as your own for this exercise.
In addition to auto insurance are there any other ways that you can deal with the risks and exposures of operating an auto in Louisiana?
In the risk analysis of premature death, disability, illness, unemployment or retirement assume that you will purchase the home in Kenner as speculated above. What methods can be used to deal with personal financial risk? If insurance is one of the methods used explain in detail what type of insurance protection that you chose and why. Include any insurance proposals in your report. What other programs come into play in regards to your personal financial risks?
What business exposures do you have and how will you deal with them?
This project is to be turned in no later than April 24, 2018. Your findings should be neatly organized and typed.