Case Study Shelly and Alan are both 38 years old. Theyf are nonsmokers and have 2 young children, Brandon (8) and Ally (6]. They have recently switched financial institutions to renew their mortgage and as a special bonus have been offered a free financial plan. The team has met with the couple and collected the following information: Description Assets Liabilities Income Expenses/Payments $145,000 Annual Earnings Shelly $85M + Alan $60M assume an income tax rate of 30% Home $550,000 Mortgage $350,000 $1,840/mo (not insured) Heat/Hydro/Taxes $700/mo Cars (2) $35,000 Car loan $15,000 $450/mo $2,500 Savings Account (joint) $25,000 Shelly's RRSP contributing $2,000/yr] $40,000 Alan's RRSP (contributing $4,000/yr $145,000 Group life insurance policies Shelly $85M, Alan $60M (spouse is beneficiary for both) Credit card $5,000 Minimum payment is 5% / mo Low interest rate credit card owing (12%) with a limit of $12,000 Groceries/ Drug Store $600/mo Children's activities, travel clothing General Expenses $8,000/yrShelly and Alan have recently lost a close friend in a car accident. They feel so sad to see their friend's wife left struggling to raise and provide for her 2 children all alone. Shelly and Alan have given some thought to the family's financial affairs should an unexpected tragedy occur. Their wishes include: family remains in the home, $140,000 is available for the children's education, if one spouse passed awaythe other would need supplemental income equivalent to 50% of the other spouse's gross income until Ally completed a post secondary degree at 22. |fthey both passed away Alan's sister would take care ofthe children and would require income of $20,000 each until Ally completed a post secondary degree at 22. Shelly and Alan would like the team to assess the amount of life insurance they would need if: 1) Shelly passed away 2] Alan passed away and 3) both pass away. 4)They also want to know if there is a rider that would provide protection for both their children until they are adults. 5) Shelly and Alan are also concerned about getting sick or being in an accident and not being able to provide for their family. They ask you what steps they could take to protect against illnesses or injuries in case they are unable to work for 6 month 1 year. 0 .05 discount rate 0 make and state any other assumptions and ignore estate taxes