Financial Planning Report: Analysis of Laura and John's Financials

This report provides a financial analysis and recommendations for Laura and John, a couple with different employment statuses and financial situations. The report begins by outlining their current financial standing, including income, assets, and liabilities. It then assesses their insurance needs, consi...Read More

Part 1
The Laura and John are in the long-term relationship. Then current age of Laura is aged
33 and she is engaged as chemical engineer in a full time basis. She currently earns a gross salary
of $85000. One the other hand John is aged 36 and is engaged as a freelance journalist. It is
expected that he would earn a gross income of $53000 from freelance journalism. John being a
freelancer it has been seen that his salary has varied widely during the year. Laura is currently
pregnant so she is planning to take a 2 year off before reentering the job.
On discussing, the investment related with both of them it could be said that they have a
balanced risk profile. The John has portfolio of shares that he has inherited from his
grandmother. They currently live in rented house. On analyzing their liability, it has been seen
that Laura has a car loan. John and Laura combined have credit card debt of $13000.
The Laura has superannuation balance that is invested in the balanced funds. She has life
insurance and TDP insurance cover that is held within the superannuation. Laura has many other
insurance outside the super fund that includes TDP insurance. John has a superannuation fund
that is invested and has life insurance outside superannuation.

Part 2
Recommendations
Introduction
In this document, an attempt is made to provide advice to Laura and John based on their
current situation. The advice is made after thoroughly analyzing the current situation of both
Laura and John. That includes understanding their level of income, available assets and current
insurance cover. The main aim of this statement of advice is to ascertain the current insurance
requirement of the clients and providing recommendations. In order to provide the
recommendation different types of insurance will be discussed and they will be evaluated with
the current situation of the client in order to understand whether they would require the
insurance. In addition to this, different insurance products will also be analyzed so that best can
be selected for the client.
Life Insurance
There are different types of life insurance depending upon the cover. The cover is
selected depending upon the circumstances and need. The different types of life insurance covers
are:
 Life cover;
 Total and permanent disability cover (TPD);
 Trauma cover;
 Income protection cover;

Life Cover
The life cover is a type of life insurance that is known as the death cover or term life
insurance. In this insurance, the beneficiary received a set amount of money if the insured dies.
The decision on the amount of life cover should be based on the amount of debt, education cost
of the children in future and the amount that is required by the family to leave life comfortably in
future. It should be noted that higher the cover more is the insurance amount payable therefore
before determining the cover the current financial condition should be evaluated.
On evaluating the current situation of the client, it can be seen that both Laura and John
has life insurance cover. Laura has life cover held within the superannuation. In addition to this,
she has three life insurance cover outside the superannuation fund. In case of john he has a life
insurance cover outside the superannuation.
Based on the current situation it can be said that John has one life insurance outside the
superannuation. He should continue that insurance cover, as it is sufficient. On the other hand,
Laura has insurance provided with the super balance. It is recommended to reduce at least two
insurance outside the superannuation fund in order to save the premium and increase cash flow.
Total and permanent disability cover (TPD)
This insurance provides cover if the individual is totally and permanently disabled. This
insurance helps the insurer to cover the cost of the rehabilitation, future cost of living and the
repayment of debt. The TDP can be purchased from the insurance companies directly or through
the super fund.
On evaluating the current situation, it can be seen that Laura has TDP insurance cover
from the insurance company. Whereas John does not have the TDP insurance cover.

The TDP insurance is important in case of emergencies. Therefore, it is recommended
that John should take a TDP insurance cover from the superannuation fund or outside insurer.
Trauma Insurance
In case an individual is diagnosed with serious illness, in that case trauma insurance
provides cover. In trauma insurance, the insurer pays a set amount to the insured. It should be
decided whether an individual requires a trauma insurance after evaluating the private health
cover, type of life insurance, the family support that is available and other factors.
In the current situation, both Laura and John does not have trauma insurance. However,
Laura has sufficient life insurance cover so she will not require trauma insurance. On the other
hand, John has life insurance but it is recommended that a Trauma insurance will be handy for
him since his career is based on freelancing and the income is not fixed.
Income Protection Insurance
The income protection insurance helps to recover the income lost due to sickness or
illness. This is an important insurance for any one depending on income. In the current situation
it can be seen that both the does not have income protection insurance cover. Therefore, it is
recommended that both the client should take an income protection insurance.
Recommendations and Conclusion
Based on the above discussion and evaluation it is recommended that a trauma insurance
of $200000 should be taken to cover the medical expenses. The income protection insurance is
essential and should be taken out immediately by Laura as due to her childbirth she is expected
not to attend office for two year. This means if the income protection cover is not made the

income of the client will reduce. In case of Life and trauma insurance the amount of cover
should be $3450000. The calculation is:
(85000+53000)= 138000
138000/.04= $ 3450000.