The assignment is for teams of 4. If you want, you need to inform me by e-mail. Please send one e-mail with the name and student number of group members and CC all group members in the e-mail. by June 30th. If you want to do it individually, you may do so. I will mark groups and individuals differently.

Title: The Six Step Planning Process related to Risk Management

Pick a young married couple of your choice (let's call them John 40, and Mary 38) with two small children ages 3 and 5 and go through the six step planning process with them as it relates to risk management.

I have provided the family's income and expenses plus their assets and liabilities. Use the tables attached to tell me their story.

Make John the breadwinner and Mary stay at home mom who will take care of the kids.

What are their needs for Risk Management (insurance)? Because John is the only person working outside the home, what will happen to the family if John dies today? How much insurance they need? Expect that the children need taking care of until they finish university at age 22. You need to d an insurance Needs Analysis and come up with exact dollar amounts as to how much insurance they need. To come up with a dollar amount, you also need to do n Education Needs Analysis for the children's post secondary education.

Steps to take

1) Use the attached income statement, annual Expenses and Assets and Liabilities for your calculations.

2) Come up with their annual expenses today. See below

3) How much excess/shortfall of income they have now?

4) Come up with their assets. See Below

5) If John dies today, they need money for the next how many years? (Assume money is needed only until both kids finish University (XXXX Years) at which point Mary remarries)

6) You need to calculate their annual needs (expenses) adjusted for inflation. Use the 5 function to see their needs for the next n years.

7) Add up all their financial needs (pay off mortgage (One time payment), pay for school (10-15 years from now, paid during 4 years), pay for their annual expenses for the next XXXX years and whatever else you think they need).

8) Buy enough insurance that pays them for these calculated amounts less the assets that they have now (Which assets are available for this purpose?).

In each step you must have at least one important OBJECTIVE and clarify how you achieved it. You are trying to answer ONE QUESTION in each step and each question starts with a "How". For example: How do you establish client-planner engagement with Mary and John?

Please look at the rubric in conjunction with this document.

Your paper should be at least but no more than with line spacing of 1.5 and font of Arial 11 (Same format as this instruction).

Submit your documents in WORD document only (no pdf etc).

Annual Expenses

Mortgage $18,000

Utilities $3,600

Maintenance $6,000

Food $9,600

Telephone + Internet $3,000

Clothing $7,200

Car expenses $2,400

Medical expenses $1,800

Vacation provision $2,400

Unexpected expenses $2,400

Total Expenses $56,400

Annual Income

Employment Income $95,000

Income Taxes $23,750

EI and CPP $4,500

Net Income $66,750

Annual Savings/Deficit $10,350

Assets

Chequing / Savings Accounts $500

Registered Investments $25,000

Non-Registered Investment $35,000

Home $750,000

Personal Assets $80,000

Automobile $40,000

Total Assets $930,500

Liabilities

Mortgage $530,000

Credit Cards $-

Student Loan $15,000

Other $-

Total Liabilities $545,000

Net Worth $385,500