Emily and James are a married couple with two young children, Olivia and Ethan. They both work full$-$time and have a combined annual income of $$100,000.$ Emily works as a teacher, earning $$60,000$ per year, while James works in marketing, earning $$40,000$ per year.

To ensure financial security for your client family, you need to calculate the minimum amount of life insurance, disability insurance, and critical illness insurance that you would recommend. Assume that disability insurance would replace $60\%$ of the disabled parent's income, and critical illness insurance would provide a lump sum of $$50,000$ upon diagnosis. $($Remember online calculators are available from the main Canadian life insurance firms including Canada Life and Sun Life$).$

Consider the following probabilities of disability based on statistical data:

Emily: $10\%$ chance of disability.

James: $5\%$ chance of disability.

For disability insurance, assume that a disability lasting five years would impact the disabled parent's ability to work during that period.

You have the option of submitting this with a partner $$ BUT ONLY $1$ partner!

Your task is to calculate the minimum insurance coverage required for each type of insurance $($life$,$ disability, and critical illness$)$ and determine the impact of one parent experiencing a disability lasting five years.

Additionally, discuss whether the income received during disability would be taxable or non$-$taxable and consider the type of life insurance $($term or permanent$)$ that would be most suitable for your client$$s situation.

Other factors to consider include:

Client$$s Future Goals:

They wish to retire at age $65$ and have after$-$tax income of $$75,000($in today$$s dollars$)$

They want you to devise an education savings plan to ensure they maximize the Government grants available.

They wish to purchase a condominium costing $$475,000$ within the next $5$ years and have received a gift from each of their parents totalling $$75,000.$ How would you recommend they invest this money today in order to have it available to purchase the condominium.

Please ensure that you consider the Six Step Risk Management Process in your submission.

Submission Details:

You can submit individually or in a group with one other student.

Submit your answers to eCentennial by Friday, March $8,2024,$ at $11$:$59$ pm and clearly note who your partner is$.$

Note: Make sure to provide clear calculations, reasoning, and explanations for your answers.

Your response should be between $4$ and $6$ pages in length.

Additional Information:

Emily$$s defined benefit pension will pay annual income $($before tax$)$ of $$52,500$ indexed beginning at age $62.$ James has a defined contribution pension plan $($currently worth $$47,500)$ to which he currently contributes $9\%$ of his gross income and his employer matches up to a cap of $$5,000$ per year.