Your financial plan should take several things into account - your age, dependents, assets, debts, future income needs and your tolerance for risk.

In some cases, term life insurance can be a strong financial planning tool to protect your survivors. Let's use a real-life scenario to demonstrate how term life insurance can play a role in your financial plan. To protect the privacy of our client, we use an assumed name, but the circumstances here are real.

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Meet "Dan." Dan is a 30-year old male and a non-smoker, in good health. He has been married for 5 years, and he and his wife purchased their family home just after their first child was born three years ago. Now, Dan and his wife are expecting their second child and he realizes that life is happening very quickly! These rapid changes in his family, and the responsbility that goes along with them, have Dan concerned that he does not have an appropriate plan to protect his family in the event of his death. With 25 years remaining on his mortgage and two children to eventually put through college, Dan needed to supplement the savings and investments he is still building to meet these needs.

Since Dan is a non-smoker in good health, there is no immediate concern about his demise; however, we must consider mortality statistics that show women are likely to live longer than a man. Seeing how quickly his circumstances have evolved to affect the family's financial security have Dan taking action.

We secured a $250,000 30-year term life policy for Dan at an affordable monthly premium of $44.15. This amount of coverage will pay off his mortage, pay for his children's college education and what is leftover will supplement his wife's income in the event he predeceases her in the next 30 years. 

At $1.45 per day, for Dan this is a manageble way to budget covering these costs if needed in the short-term. In the long-term, the provisions of the policy provide Dan with some options later in life. Should Dan outlive the policy, at the end of the term he will have two choices:

  1. A guaranteed return of premium totaling $15,000. Since his premiums were already taxed as income, they come back tax-free.
  2. He can opt to apply the $15,000 cash value of his return of premium to a "paid-up" policy that will stay in tact until his death and pay a $36,000 death benefit to one day cover his final expenses.

For Dan's ecnomic situation and tolerance for risk, term insurance turned out to be an ideal solution. Every personal and financial scenario is different. We use Dan's example to simply demonstrate how term life insurance may play a role in a larger financial plan.

To have us evaluate your personalized situation or to audit your current financial plan and life insurance coverage, call us today for a free consultation at 603.743.4247, and we'll present options that are appropriate for you.