Life insurance decision,
Shortly after graduation, John (age 24) is considering buying a $250,000 life Insurance policy because he is planning to get married in the near future and belives that this amount is a good starting point for his needed life insurance program to project his future family.
Yearly renewable term for this amount of protection will start at an annual cost of $275, but, is expected to increase in costs at an average increase of 6% per year.
A life paid up at age 65 policy for this amount of protection will cost $2,650 per year, the cost will never increase, the estimated Cash Value at age 65 is $287,500 and the life insurance protection is expected to increase to $625,000.
John believes that he will need the life insurance protection at least until age 65.
What will the term insurance cost John per year at.
Age 40 $ _______
Age 50 $_______
Age 60 $_______
Age 65 $_______
If John selects the life paid up at age 65 policy, what will his annual rate of return on his annual premiums paid into the policy until age 65, based upon hi projected policy cash values at Age 65? __________%
John could budget carefully and pay for the higher cost policy, but he is unsure what to do. What recommendations do you have for John to help him make the right financial decision?