Insurance Proposal for Bill and Kathy Collins

Introduction

As a financial advisor, I understand the importance of having appropriate insurance coverage to protect your financial well-being and provide peace of mind. Based on your current situation and future goals, I recommend considering the following insurance types and coverage amounts:

1. Income Replacement: Disability Coverage

Bill and Kathy, as a professional couple, your ability to earn an income is a valuable asset. In the event of an unexpected illness or injury that prevents you from working, disability coverage is crucial to ensure continued financial stability. Considering Bill’s employment at a small family-run business, I recommend the following disability coverage:

• Bill: Since Bill already has a short-term disability plan through his employer, which covers him for six months, it provides a good foundation. However, it is essential to evaluate the coverage amount and duration to ensure it aligns with your needs. We should review the policy details and determine if any additional coverage is required.
• Kathy: As a self-employed architect, Kathy does not have any disability coverage. I strongly recommend Kathy to acquire an individual disability insurance policy that covers her specific occupation and income level. This will provide income replacement in case of any disability that prevents her from working.

2. Life Insurance

Life insurance is crucial to protect your loved ones financially in the event of premature death. Considering your current financial situation and future goals, I recommend the following life insurance coverage:

• Bill: Bill’s group benefits through his employer include $100,000 life insurance coverage. While this provides some protection, it may not be sufficient considering your mortgage and potential future expenses. I recommend considering an additional individual term life insurance policy to provide adequate coverage for your family. The coverage amount should be based on factors such as mortgage balance, future education expenses, and income replacement needs.
• Kathy: Since Kathy does not have any life insurance coverage, it is essential to provide financial protection for her family. Similar to Bill, I recommend Kathy to consider an individual term life insurance policy with a coverage amount based on her specific needs and future financial obligations.

3. Education and Mortgage Needs

Considering your plans to start a family and your current mortgage, it is important to address the potential financial burden in case of disability or premature death. Here are some recommendations:

• Education Needs: In the event of disability or death, it is important to ensure sufficient funds for your future children’s education. I recommend considering an education savings plan or setting aside a portion of your life insurance proceeds to cover these expenses.
• Mortgage Needs: With a manageable mortgage balance of $350,000, it is crucial to protect your home in case of any unforeseen circumstances. I recommend acquiring mortgage insurance coverage that would pay off the remaining mortgage balance in case of disability or premature death.

4. Insurance Types: Term Coverage or a Blend?

Considering your current financial situation and goals, I recommend a blend of insurance types to provide comprehensive coverage while being cost-effective:

• Term Life Insurance: Term life insurance offers coverage for a specific period, providing protection during the years when financial obligations are highest, such as mortgage payments and raising children. It is typically more affordable compared to other types of life insurance. I recommend considering a term policy with a coverage period that aligns with your mortgage term and the anticipated duration of financial dependency.
• Whole Life or Universal Life Insurance: While term life insurance covers immediate needs, permanent life insurance options like whole life or universal life can provide lifelong coverage and potential cash value accumulation. However, given your current situation and goals, the cost of permanent life insurance may not be justifiable at this time.

5. Government Plans and Benefits

Explore the available government plans and benefits that can complement your insurance coverage. Consider the following:

• Canada Pension Plan (CPP) Disability Benefits: In the event of disability, Bill and Kathy may be eligible for CPP disability benefits. It is advisable to understand the eligibility criteria and potential benefits to determine how they align with your overall coverage needs.
• Employment Insurance (EI): Review the EI benefits related to disability coverage and assess whether they provide adequate income replacement. This can help determine if additional private disability insurance is required.

6. Existing Coverages and Other Concerns

Review your existing coverage, including Bill’s group benefits, to ensure they align with your current needs. Additionally, consider the following concerns:

• Lifestyle Choices and Health Conditions: Given Bill’s smoking habit and family history of heart disease, it is important to disclose all relevant information to insurance providers. These factors may impact premium rates and coverage options.
• Review Line of Credit and Credit Card Usage: Evaluate your overall debt situation to ensure it aligns with your insurance coverage. Consider adding critical illness coverage or other forms of protection to address potential financial burdens associated with health issues.

Amount of Coverage

Determining the appropriate amount of coverage requires a comprehensive analysis of your financial obligations and future goals. I recommend scheduling a detailed financial planning session to assess your income replacement needs, outstanding debts, mortgage balance, education expenses, and other financial goals. This will enable us to provide accurate and personalized insurance recommendations.

Conclusion

Based on your current situation, it is crucial for both Bill and Kathy to have disability coverage and life insurance to protect their financial well-being and provide for their future family. By considering the recommended insurance types and coverage amounts, you can ensure financial security in the face of unexpected events. It is important to review and update your insurance coverage periodically as your circumstances change. As your financial advisor, I am here to guide you through the process and help you make informed decisions for your family’s financial future.