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John and Linda are in their 4 0 s and live in Markham, ON . Both are employed and earning good incomes. They have one
John and Linda are in their s and live in Markham, ON Both are employed and
earning good incomes. They have one child attending university. Each month, after
contributing to their RRSPs and TFSAs, they spend most of what is left.
John earns $ a year. His employers group insurance plan provides full benefits,
including disability income insurance. Linda earns $ per year but her employer
does not provide benefits. Aftertax, her income is $
When considering their lifestyle expenditures, net worth and all the other factors in their
financial situation, John and Linda conclude that their greatest risk exposure lies with
Lindas income stream. If she became disabled and unable to work for any length of
time, they would not be able to maintain their standard of living.
They would like your advice on how to address this risk.
What is John and Lindas risk management objective?
Identify the type of risk.
Evaluate the risk.
For each quadrant of the matrix, recommend one strategy that would manage
their identified risk.
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