ASSIGNMENT facts:

Bill and Kathy Collins are a professional couple: both are aged 32. He is employed at a small family run business as a mechanic, while she is self employed as an architect. Both are social drinkers, and Bill is a regular cigarette smoker. Both infrequently smoke legal cannabis.

Bills employer provides benefits, which are the following:

$100 000 life insurance, with 100% accidental death and dismemberment

$50 000 spousal life insurance coverage

A $500/ week short term disability plan that covers him for six months

Up to $1000 dental and $1000 eyecare annually, with no deductibility.

Kathy has no coverage of her own, since she has had little time to think about possible insurance coverages. Instead, they have worked to buy a home, pay down the mortgage and invest in RRSPs and TFSAs. Why might they want insurance?

They own a home worth approximately $800 000, and their diligent prepayments have helped to reduce the mortgage to a very manageable $350 000. The mortgage was renewed last month at 3.5% with a 25 year amortization and monthly payments. Their RRSPs total just under $250 000 and they have $87 000 in their TFSAs. The RRSP generates an average of 7% annual return while the TFSA generates closer to 6%. Their joint bank balance is a reserve fund with a normal balance of about $5 000. Last year Bill earned gross income of $107 500 and Kathys gross income was $143 000. She incurred $23 000 in expenses, $4 000 of which more closely related to lifestyle choices than business expenses in actuality.

They have a line of credit with a current balance of $20 000: it was used to landscape and update their backyard during the pandemic. The LOC has a minimum monthly payment obligation and the rate of interest charged on the account is 5,5%. Generally, they use their credit card to cover monthly living expenses, paying off the total balance as it comes due. The average monthly bill is $3 500.

Bills family history includes some heart disease later in life- Bill ascribes that to diet, and for that reason has adopted a low carb/ keto diet plan. Kathys mother has diabetes and high blood pressure, and her grandfather developed Alzheimers late in life.

Recreationally, Bill loves to ride his motorcycle and they both enjoy scuba diving. They are thinking that they are now relatively settled, and its time to begin a family. They are thinking about their life insurance needs.

PROVE: your case as to why they might need some insurance, and specifically what types of insurance and at what amounts. Be sure to show why you recommendation makes most financial sense. Your objectives will include:

Income replacement

Disability coverage

Critical illness coverage

Education and mortgage needs

Whole life, universal life, term coverage or a blend ?

Amounts of coverage

Government plans and benefits

Existing coverages

Any other concerns you believe relevant.

You need to present a reasonable, intelligent recommendation to them. Ensure that you reflect appropriate financial calculations and considerations. You will have to do some analyses of their income and debt obligations.

The mathematical position of this case accounts for 40% of the total score for this assignment. YOU ARE BEING EVALUATED MAINLY ON YOUR ABILITY TO DEVELOP AND PRESENT A COMPELLING ARGUMENT, WHICH IS A CRITCIAL SKILL IN THIS BUSINESS ENVIRONMENT.

Requirements:

Appropriate cover/title page

You will make an argument for one tax structure over the other.

Your argument should be logical and reasonable, employing facts to substantiate your position. You will fail this assignment if you do not do take this step.

At all times keep written language appropriate and professional.