Question

Étienne and Amélie are both 45, married, and with two children. They own a website design company from which they each draw a salary of $100,000 per year. They have no employees. Their house and cottage together are worth close to $1 million. They each have an investment income of $5,000 per year and RRSPs totaling close to $500,000. Alexandrine, their insurance agent, takes note of this information and is about to calculate the couple's disability income replacement needs. What other information should Alexandrine get from Étienne and Amélie before proceeding with her analysis? -None, Alexandrine has all the necessary information. -Their total expenses. -Details about their retirement projects. -Details that would allow her to calculate their needs separately.

Answer 1

To calculate Étienne and Amélie's disability income replacement needs accurately, it is essential for Alexandrine to gather information about the couple's total expenses. This will help determine the amount of income they would need to maintain their lifestyle in case of disability.

Step-by-step explanation:

To properly calculate Étienne and Amélie's disability income replacement needs, their insurance agent Alexandrine should gather information about their total expenses. This information is crucial as it provides the basis for understanding how much income they would need to sustain their current lifestyle if they became unable to work due to a disability. In addition to their income, it's important to know the couple's monthly and yearly expenditures, including mortgage payments, utilities, food, transportation, education for their children, and debts or loans they may be servicing.

Knowing the couple's expenses will enable Alexandrine to ascertain the replacement income they would need to maintain their standard of living without putting undue financial strain on them during a period of disability. Without this information, any disability income replacement plan might be insufficient or overly expensive. While other details like retirement projections and calculating their needs separately might be relevant for a comprehensive financial plan, the immediate concern for disability insurance is centered around current expenses and financial obligations.