If Sue Wright was to die today, how much would the Wrights need in the family maintenance fund?

Calculations:
• Tom and Sue earn a combined income of $84,000 per annum
• In death they would require 75% of income or $63,000 per annum
• Plus child care at $400/month or $4,800 per annum = Sum of $67,800
• Estimate $1,200 per month in survivors benefit for child support or $14,400 per annum
• Hence if one person dies the income of the survivor would be:-
• Annual Salary ($42,000) + Survivors child benefits ($14,400) = $56,400
• Required amount = 75% combined salary ($63,000) + Child support ($4,800) = $67,800


Therefore projected shortfall = $67,800-$56,400 = $ 11,400

If Tom and Sue had a life insurance gap of $50,000 what are the steps required in order to close that gap?


• Discuss existing policy provisions with the Life Assurance Company
• Determine the cost of additional coverage and see if that policy can be extended
• If the policy cannot be extended take out an additional life policy for the additional $50,000 worth of coverage


“To ensure that your family has enough money to pay off your debts, the easiest way may be to buy a life insurance policy that will pay a benefit equal to the amount of your current debts” (Smith, 2009)