Insurance

Insurance

20 year Renewable Term Insurance

It is a renewable term insurance, which can allow John to automatically renew his coverage after the policy term is over. In the long run, it can help John to meet his safety objectives for his son and his house (Life Insurance, 2006).

Life-paid-up-at-age 65

It is a whole life insurance policy with limited payments. It can provide John with whole life policy benefits, and he will only have to make payments till the age of 65. In other words, as John will reach the age of retirement, his financial obligation will be reduced while he will maintain his insurance coverage (NALC, n.d.).

Ordinary Life Insurance

It is a straight life insurance, which is commonly known as whole life insurance in the US. In case of John's death (excluding suicide case), Sam being his beneficiary, will be financially supported and compensated by the insurance company. For instance, if John opts for an ordinary policy of $ 800, 000, in case of his death, Sam will be paid $800, 000. However, it may be costly today with fruitful results in the future (life Insurance Hub, 2005).

Universal Life Insurance

It is a tax deferred earning that can help John's money to grow faster. In case of death, it can provide benefit of lump-sum cash amount. It can also allow John to earn coverage for long term care and critical illness, as life event riders (Allstate Benefits, 2011).

Scenario Questions

Need for Protection of Sam

According to my analysis, Universal life insurance can best satisfy the need for Sam's protection. In case of an early or premature death of John, it is the suitable policy that can ensure long term protection and better care of Sam. The situation can be well understood by an assumed severe injuries or death of John as illustrated by figure 1(Allstate Benefits, 2011).

Figure 1: Prospective Benefits from Selected Life Insurance Plan (Allstate Benefits, 2011, p. 2)

Need of Accumulating Funds to Take Care of Sam

As explained above, in case of normal death, Sam will be fully compensated by the ordinary life insurance policy. Hence, it is the best option that can be adopted by John to accumulate funds for long term safety and up bring of his only child, Sam. It can assure John that after his death, his son will not be left alone and isolated, but his father John will have saved money for rainy days.

Need of Accumulating Funds for a Down ...