Question

What type of Life insurance such as term, whole life, variable, etc. would you recommend for each of these clients and why? Be sure to explain how each policy works and why it is right for them.

A middle aged couple (60 and 61) with an adult kid (37) and an elderly father that has moving in with them cause he is struggling to take care of himself (age 81). The husband and wife each earn $60,000 and get a total of $100k from work in life insurance ($50k each). They want to retire as soon as possible and have pensions that will pay them decent incomes in retirement.

Answer 1

From my point of view as one of the spouse who is aged 60 shall have to opt for a retirement plan and the other aged 61 shall have to go for whole life insurance plan because each plan has the benefit of retirement plan has post retirement corpus, death as well as vesting benefit. While the other plan has whole life coverage, guaranteed sum assured, healthy returns.

Retirement Plan

Retirement plan helps to build corpus for your retirement. Helping you to live independently financially and without worries. Most of the child plans provide annual installments or one time payout after the age of 60 years.

In case of an unfortunate event, life assured passes away during the policy term - immediate payment is payable to the nominee by the insurance company. Death benefit will be higher of coverage or fund value or 105% of premiums paid. Vesting Benefit will be payable if the life assured survives the maturity age. In which case, payout will be fund value which has to be utilized for buying an annuity.

Best known for: Long-term savings and retirement planning.

Benefit : Helps in building corpus for retirement.

Whole Life Insurance

A whole life insurance policy covers the life assured for whole life, or in some cases, up to the age of 100 years. Unlike, term plans, which are for a specified term.

The sum assured or the coverage is decided at the time of policy purchase and is paid to the nominee at the time of death claim of the life assured along with bonuses if any.

However, if the life assured outlives the age of 100 years, the insurance company pays the matured endowment coverage to the life insured.

The premiums are higher as compared to term plans. Whole life insurance plans also offer partial withdrawals after completion of premium payment term.