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Farid, 39, earns $70,000 a year and has group life equal to twice his salary, plus $60,000 of non-registered savings. If he dies, his wife Leila, who nets $30,000 a year, needs $48,000 a year after tax for the family. Other needs: final expenses $25,000, mortgage $310,000, other debts $18,000 and an education fund of $80,000. Capital earns 4% and only the income is spent. How much additional coverage does Farid need?
Lump-sum needs are $25,000 + $310,000 + $18,000 + $80,000 = $433,000. The income shortfall is $48,000 − $30,000 = $18,000, and $18,000 ÷ 0.04 = $450,000 of capital. Total need $883,000, less savings of $60,000 and group life of 2 × $70,000 = $140,000, leaves $683,000. Ignoring Leila's own income capitalizes the full $48,000 ($1,200,000) and overstates the need at $1,433,000; $823,000 forgets the group life already in place. Source: CISRO LLQP Curriculum (May 2015; current as at 12 Oct 2026), Life component 1.3 (math behind needs analysis: capital needs approach); arithmetic on the stem's stated assumptions (as at 12 Oct 2026).
Candidates capitalize the family's whole income target instead of only the shortfall left after the survivor's own income.
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