Bellamy and Clarke are a very successful couple in their mid-30's. Bellamy is a security consultant and
Question:
Bellamy and Clarke are a very successful couple in their mid-30's. Bellamy is a security consultant and Clarke is the senior vice-president of marketing for an medical supplies company. They call you to discuss and advise on their insurance needs.
Bellamy's income (last calendar year) $84,000
Clarke's income (last calendar year) $83,000
Investments (current rate of interest 6.3%) $608,000
RRSP's $341,000
Real Estate $1.23 Million
Cash $14,700
Mortgage $287,000
Line of Credit (loan) $225,000
Credit Cards $0
Personal loans (cars, etc.) $113,000
Investment Rate 6.30%
Taxes on income 20%
Inflation 2%
1. How much insurance does Clarke need using the capitalization of income approach for 20 years?
2. How much would be required to pay the last or final expenses of Bellamy or Clarke?
3. If Bellamy was to acquire a disability policy with a 60% benefit, what would the monthly disability income benefit be?
Expert Answer:
1 Clarke would need 4950000 in insurance using the capitalization of income approach for 2... View the full answer
