sample-1.docx - 2. Make sure the family is taken care of in...

2. Make sure the family is taken care of in the event of an untimely death or disability of
either Remington or June.
Death
Scenario 1 : Remington Dies
Remington was self-employed and his average annual salary was $180,000 p.a.. Post his
death, his income needs to be replaced.
Income Replacement is basically replacing the income through an insurance to help your
family financially when you’re not alive.
Below are the expenses that needs to be covered :
$135,000 - Annual expense amount (per annum)
$67,500 - Emergency fund for 6 months ($135,000/2)
$91,380 – Education Cost per child (per annum)
Calculation of Annual Education Cost
Current Cost : $15,000
Future Cost : $20,101.43 ($15,000*(1.05)^6)
Therefore,
Annual Cost : $20,101.43
Program Years : 5
Annual Increase : 5% p.a.
Hence,
Corpus Required : $91,380.00 (per child)
An Insurance is required to cover a total of $385,260 p.a. ($135,000 + $67,500 + $91,380 +
$91,380) for 10 years.
An additional support from the Insurance is required for 10 years assuming that the kids
would be of age 22 in 10 years and would not need as much of financial assistance as of
now.