RISK Management and insurNCE PLANNING

Authors:
Eashan Murali
Sachkirat Singh
Sonam Sharma
Nithul Krishnan
 LIFE INSURANCE
Steve Austin is 35 years old. I, as his financial planner would recommend that he should
take a 20-year term life insurance worth $550,000 provided by Sun life Financials, which
was arrived based on the information provided regarding his sex, his income, liabilities,
various savings and his age. For this purpose, we assume that Steve is healthy, is not
suffering from any severe illness currently or in the past and doesn’t indulge in any activity
that increases the risk of being insured. We also assume that he is 5’11 in height and weigh
70 kgs. For this coverage he would incur a monthly premium cost of $55.02. This coverage
will be in place, provided the premiums are paid, and pay out a death benefit if Steve dies
due to unexpected life event. This Since this is a 20-year term life insurance he will have the
same amount of premium for the next 20 years and will have to renew the policy when he’s
55 years old. At this stage, he could renew the term policy and continue with it or convert it
to a permanent life insurance which will be much affordable cause the premium raises as an
individual grows old. If Steve had not been healthy, is suffering from any severe illness
currently or in the past and does indulge in any activity that increases the risk of being
insured then the monthly premium for the same coverage would have been $55.02. I
recommend the death benefit of $550,000 because in case Steve dies prematurely then,
Mary could use this to cover the lumpsum and cashflow needs of the surviving member of
the family like the education cost of their daughter Lindsay. And plus, since they are
planning to purchase a house worth

Mary Austin is also 35 years old. As a financial planner, I would recommend Mary to have a
20-years term life insurance of $575,000 provided by sun life Financials. Her monthly
premium cost would be $44.02 which is based on the information provided regarding the
gender, income, liabilities, various savings and her age. The premium paid by Mary is lower
than the premium paid by Steve because she is a female and female tend to have a longer
life expectancy than male. For this purpose, we assume that Mary is healthy, is not suffering
from any severe illness currently or in the past and doesn’t indulge in any activity that
increases the risk of being insured. We also assume that she is 5ft 3 in and weigh 65 kgs.
Since this is a 20-year term life insurance the underwriting process only must be done once
before the contract is excepted and the premium is going to be leveled for the next 20
years. After the 20 years term Mary could either renew the term life policy for the next 20
years, since Sunlife Financials provide term insurance coverage till the age of 85 or they
could convert the term insurance to a permanent insurance which would be much
affordable than a term life insurance as the premium increases as an insured grows old. If
Mary had not been healthy, is suffering from any severe illness currently or in the past and
does indulge in any activity that increases the risk of being insured then the monthly
premium for the same coverage would have been more than $44.02. Lastly, I recommended
Mary the term life insurance coverage of $575,000 because she earns more than Steve and
if she dies due to unexpected life incident then there might be a significate financial
hardship and cashflow issues for the family especially for Lindsay, who is 5-year-old, would
require enough funds assigned to her to cover her education cost in the coming years.

Since the insurance coverage for both Steve and Mary is above $500,000 dollars it would be
beneficial for them to get a temporary insurance till their insurance contract is accepted by
the insurance career so that they are covered in case any unexcepted circumstances occur.

Source:https://www.sunlife.ca/en/get-a-quote/?Choose+a+product=%2Fen%2Fget-a-quote
%2F+&Get+an+online+quote=Get+an+online+quote

Steve’s quotes:https://drive.google.com/file/d/12wjZVavCvzoGG6LDBgR6NjblGyAdOSX_/
view?usp=sharing

Mary’s quotes: https://drive.google.com/file/d/1rfRZG9k5eZBNuE98jRzQrZAxZNsiiw4G/

view?usp=sharing

HOME OWNER’S INSURANCE

Deductible: $1,000
Liability: $1,000,000
Water Damage: Yes
Outbuildings: Included
Contents: Included
Voluntary: Medical Included
Voluntary: Property Included

OPTION 1
Square One Insurance Services-
$107.17 / month
$1,286 / year

OPTION 2

SGI Canada
$139.00 / month
$1,668 / year

OPTION 3

Zenith Insurance

$211.42 / month

$2,537 / year

Steve and Mary Austin can decide after considering few factors like, if the insurance covers
all of their assets, that is, ppersonal belongings are covered by contents coverage up to a
predetermined maximum, with extra sub-limits that apply to specialist items. This implies
that if the value of the item exceeds a particular threshold, usually $2,000 or more, the
policy might not cover it. And precious objects don't simply relate to exquisite art, furs, and
antiques; they can also contain pricey jewelry, designer clothing, musical instruments,
electronics, and even cutting-edge appliances but they can include expensive watches and
jewelry; thinking about flood insurance, that is, any homeowner's worst nightmare is water
damage. Even a tiny leak can ruin your carpets, ruin your furniture, and encourage the
growth of mildew in your insulation and walls.

Even so, the majority of homeowners who reside in high- or low-risk areas choose not to
get flood insurance. But don't think you're exempt from responsibility because your house
isn't in a flood plain. While flooding from a burst pipe or water leak in your home is covered
by home insurance, sewage backup or overland water that seeps into your home through
windows, doorways, or foundation cracks is not. Additionally, you should be concerned
about extreme weather of all kinds since it can quickly cascade into a destructive domino
effect. This is true not just for torrential rains, overflowing rivers, or melting snow. Hence,
after taking such factors into consideration, I believe Austin’s can go with Option 3 as it
provides the maximum coverage with the best monthly premium for the home owner’s
insurance.

Reference:

https://quotes.rates.ca/homequote/on/thank-you#

https://www.realtor.ca/real-estate/24738325/311-niagara-dr-oshawa-
samac

https://prolink.insure/7-things-to-consider-before-buying-home-insurance/

https://www.investopedia.com/insurance/homeowners-insurance-guide/
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-
allowances/private-health-services-plan-premiums/private-health-services-plan.html

AUTOMOBILE INSURANCE

Vehicles
  2022 TOYOTA RAV4 LE 4DR 2WD
Drivers
 Steve
Discount
 Bundle w/ Home

1. 2022 TOYOTA RAV4 LE 4DR 2WD

Comprehensive coverage- $1000 Deductible
Collision coverage- $1000 Deductible
Third Party Liability- $100000
Premium
CAA Insurance- $146 / month & $1,752 / year
Onlia Insurance-$171.55 / month & $2,059 / year

2. 2022 TOYOTA RAV4 LE 4DR 2WD

Comprehensive coverage- $500 Deductible
Collision coverage- $500 Deductible
Third Party Liability- $100000
CAA Insurance- $150.67 / month & $1,808 / year
Onlia Insurance-$174.90 / month & $2,099 / year
Comprehensive coverage helps to repair or replace the car if it's stolen or
damaged by something other than collision. Comprehensive coverage
covers from theft and natural disasters, animal, falling objects, fire etc.
Higher the deductible means higher insurance cost & lower the deductible
means lower insurance cost. Also, Austin’s can get a rider on insurance.
So that it pays on replacement value. Replacement has a benefit to get
the cheque of equivalent amount of a brand-new car. If it’s a basic
insurance, insurance company will pay only the depreciated value of car.

Austin should go with first quote with CAA insurance. There is a

comprehensive coverage of $1000 & premium is lowest of all the given
choices.

Reference 1: https://quotes.rates.ca/autoquote/on/thank-you
Advocis Core Curriculum Program Course 921 | Edition 2020 | Page No.
39-40

HEALTH INSURANCE
Steve and Mary are both covered by their employers' group health and disability insurance
plans. When it comes to group health insurance, the policy holder is the employer, while
the participants are the employees. The employer is responsible for selecting the benefits
to be included in such plans, as well as the kinds of services that can be obtained through
the plan.

Steve will no longer be covered by his employee benefits because he intends to start his
own business. As a result, he is now able to obtain personal health insurance for himself
and his family. To bridge the gap between public health insurance and the cost of services
that are not covered by provincial health insurance, Steve can purchase private health
insurance. Steve also intends to start his own business, so a health insurance policy that
covers both his family and his employees will be ideal. If Steve decides to go ahead with his
plan, he will need group business health insurance.

Quote of Private Health Service Plan for Steve

Medical expenses incurred for professional services, dental services, laboratory
examinations and tests, hospital services, prescribed medical expenses, medicine, and other
expenses can be claimed under a private health service plan.

Assumptions:

 All or substantially all of the premiums paid (generally 90% or more) related to
medical expenses are eligible for the medical expense tax credit (METC)
 With the implementation of a private health service plan, Steve can ensure that his
family and his small business's employees are covered for health insurance.
 Private health care plans are far more beneficial to small businesses than group
insurance since they expand benefits and provide far more coverage than standard
insurance. Which will benefit Steve as a business owner.
 This will be a far more cost-effective approach for Steve to obtain health insurance
as he embarks on his new enterprise.

Source: https://www.costplus.ca/wp-content/uploads/2021/03/Information-Booklet.pdf

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-
allowances/private-health-services-plan-premiums/private-health-services-plan.html