John, 42 , works as a Consultant in the field of computer animation. He earns $140,000 per year in gross. John's wife, Sandra, 43, owns and operates a homebased, incorporated business in architectural design. She draws an after-tax income of $80,000 per year. The couple has a $92,308 mortgage, with five years remaining on the amortization. The couple plans to apply their mortgage payments to their retirement savings. The couple has six-year-old twins, Amanda and Alex. At birth, the couple set up a Universal life insurance policy worth $200,000 on John's life, paid up to age 65 . According to their insurance agent, it would build up a cash surrender value that could be used for emergency purposes, or to supplement their incomes in retirement. John also obtained a disability insurance policy that would pay a tax-free benefit of $1,500 a month, enough to cover the mortgage payment at the time. The only insurance coverage Sandra has is extended health benefits that she and John have through a personal health plan. Should John or Sandra die prematurely, the survivor would need to maintain the family income to continue funding important plans, such as Registered Education Savings Plans (RESPs) and Registered Retirement Savings Plans (RRSPs). The survivor would also want to consider taking a one-year leave of absence under the circumstances. Such income will be required until John is 65. Any insurance proceeds could be invested in a balanced portfolio (50-50 split between equities and fixed income) at an expected return rate of 1.5 percent after fees. John and Sandra would like to ensure that, if they experience a similar situation, the supporting spouse could take up to two years off to help the other; they would also like to have $100,000 set aside for home renovations, if needed. They figured that in case of sudden death, they dont have immediate funds and would need $25,000 for funeral. They would like to know where their risks lie and learn about potential solutions. What is the amount of insurance required for income needs for Sandra if John dies? $1,637,880$1,507,877$1,357,877$1,687,880