Part $1$:

It has been four years since Todd last asked for advice. He has implemented a lot of changes. One of which was not to change his living arrangement. Todd loves living off of the Breezy Bend golf course in Headingley, Manitoba. Since you last spoke, he received a promotion and raise at work, took in a roommate so he could pay off his credit card debt and car loan, and is talking about getting married with his current girlfriend and starting a family. The one thing he has not started doing yet is investing for his future. With his debts paid off the cash flow is now there.

Given this new stage in his life he is looking at managing his risk in terms of insurance. He has attached his updated cash flow and net worth statements. He has a credit card with a $$10,000$ limit for $$emergency use$$ that he hasn$$t had to use in the past few months.

He wants to share his plans to upgrade his auto insurance for his $2$ door $2013$ Honda Accord EX$-$L V$6(4$WD$).$ Specifically, he would like to add several types of coverage to his policy, such as enhancing liability coverage and loss of use coverage. The latter is due to the travel needed with his promotion. Todd is now $39$ years old. Unfortunately, he also has a driving record that contains several speeding tickets and two accidents. His last accident was this past spring where he was determined to be at fault. As a result, he does not receive any discount on his insurance with MPI. Given what he has heard from some of his colleagues, he would like to have all purpose coverage with a $$200$ deductible $($standard$),$ increase his Third Party Liability to $$2$million, and add the maximum Extension Loss of Use coverage. He doesn$$t think he needs new vehicle protection or leased vehicle coverage and his vehicle is not worth more than $$70,000.$ Given he is trying to budget better; he wants to know what the monthly payments would be$.$ Todd is currently paying $$180$ per month, which is included in the Car Expenses amount listed in his current personal cash flow statement $($provided below$).$

Todd mentions that he is generally happy with the group insurance benefits that are available to him through his employer. With respect to these benefits. Todd$$s greatest concern is making sure that he has adequate coverage in the event of a long$-$term disability. Luckily, Todd$$s coverage at work provides him with $90\%$ replacement of his after$-$tax income. When you ask Todd about the definition of disability under his group plan, he has no idea what it might be$.$

Todd$$s group life insurance covers one year of his salary. He is not sure if this is enough insurance and is trying to decide between additional term life insurance and permanent life insurance. Todd knows very little about whether he should have insurance, and if so$,$ how much.

Part $1$: Questions and Answers

Regarding Todd$$s auto insurance decision, comment on:

His plan to add different types of coverage to his auto insurance policy. $(1$ mark$)$