Income replacement method$=$ $$80000$ x $7=$ $$560,000$

$-$ Danika should carry $$560,000$ of life insurance to replace her income for her family

Family Need Method

Johana and her spouse are in good health and have reasonably secure careers. She makes about $$65,000$ annually and has opted for life insurance coverage of three times her salary through her employer. With her spouse$$s income, she absorbs ongoing living costs of $$45,000$ a year. Johana owns a home with a $$280,000$ remaining mortgage balance. Other debts include a $$10,000$ car loan, $$5,000$ student loan, and $$3,000$ charged to credit cards. In the event of her death, Johana wishes to leave her family debt$-$free. One of her most important financial goals involves building an education fund of $$80,000$ to cover the cost of a four$-$year university program for her two children ages $2$ and $4.$ To date, she has accumulated $$15,000$ toward this goal in an RESP. Should she die, her beneficiaries would receive a $$2,500$ death benefit lump sum payment from the Canada Pension Plan. She also has $$25,000$ in her company pension plan. Average funeral expense is $$10,000.$ Dependents need $7$ years of income $($assume $75\%)$ as living expenses. Assume that there is a desire to have a $3-$month reserve based on her annual income. Her other financial assets are as follows:

Bank accounts $$2,100$

Term deposits $(3$ months$)3,000$

TFSA High Interest Savings $1,000$

Stock investment account $2,500$

RRSP$\text{'}$s $10,500$

Use the family need method to determine her life insurance needs.

How much she will need if she passed away $($step $1)$

Step$2-$ subtract her existing assets in cash$+$ benefits

Calc how much insurance cost she will need