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After completing a financial plan for Alice and Adam Smith (both 40yrs old), we saw that there may be a need for some insurance planning.  With two small children (twins) and a mortgage, there were plenty of future financial obligations that the Smith’s wanted to protect.

The key question the Smith’s had was how much, and what type of insurance was needed. There were so many choices: Term, whole life, universal life, critical illness, long-term disability, long-term care.

Our process started by going through a needs analysis process where we gathered information about the Smith’s particular circumstances and goals so that we could calculate the financial impact of various risks such as death and disability. Given that a financial plan was already in place, most of this information had already been discussed.

Neither Alice nor Adam currently had life insurance or critical illness insurance, however Alice had a good long-term disability plan through work.  Adam, being self-employed, did not have disability insurance.







The key information needed to make insurance decisions was as follows:

o  Alice’s income was $100,000/yr from her employer, and Adam withdrew $50,000/yr from his incorporated business(representing almost all of the business earnings).

o  The Smith’s have a $500,000 mortgage, with 15years left.

o  They would like insurance to cover final expenses, such as burial costs, for $20,000 each

o  The Smiths would like to provide for post-secondary for the twins, assuming they will each go to school for 4 years at $15,000/yr.

o  With the twins currently 10 years old, the Smith’s wanted to ensure that funds were available to meet their lifestyle needs until age 25

o  If either Alice or Adam died, the surviving spouse would need 80% of their current family income in order meet lifestyle expenses and continue to save for retirement at age 55.

With the above information in mind, we determined that Adam and Alice would each need $640,000 insurance to cover the mortgage, final expenses, and post-secondary funding for the twins.  In addition, to replace income over the next15 years, Adam would need an additional $225,000 of life insurance and Alice would need an additional $775,000 of life insurance coverage.  In total then, Adam had a need for $865,000of life insurance coverage, and Alice required $1,415,000.

Because this coverage is only required for the next 15 years, terms policies were the best fit, and Boda was able to provide quotes from a variety of insurance carriers so that we could find premiums that fit within the Smith’s budget.

In addition to the above life insurance, we also recommended critical illness insurance of $200,000 for Alice and $100,000for Adam so that in the event of a covered medical diagnosis, they could each take the time off work to care themselves and each other.

Lastly, we also recommended a long-term disability plan for Adam to ensure that in the even of a disability affecting his earning power, his family could still count on a source of income that would see them through their working years.

After giving the Smith’s some time to consider their options and the costs of the various plans Boda followed up to complete applications with the Smith’s and to guide them through the remaining underwriting steps.