Question

Section I: Life Insurance Given the scenario below, please indicate whether life insurance is needed, if so, what type (term, whole life, Universal or Variable Universal) and why? Anthony is an engaged mechanical engineer for Nissan Motors in Decherd, Tennessee. He spends most of his time with his fiancé, Max who owns a small cupcake bakery. Max and Anthony plan to get married in the next 6 months and would like to have children soon. Anthony makes $115,000 a year while Max is making $140,000 in net income from her business. She would like to hire a general manager for her store while she raises her children and expects her net income to drop to $60,000 once the GM is hired. They would like policies that would provide coverage for each other and offer protection while their children grow up. They are also interested in investing part of the premiums as Anthony hates the idea of an insurance company keeping all his premiums if he does not die within a certain number of years.

Answer 1

Yes, given the Scenario they should definitely opt for Universal or variable universal life insurance. Given their scenario better if they opt for Universal life insurance. Universal life insurance has the flexibility to adjust their premiums and death benefits. The cost of universal life insurance is the minimum amount of a premium payment required to keep the policy active. This universal insurance policy can accumulate cash value, which earns interest based on the current market or minimum interest rate. The policyholders may borrow against the accumulated cash value without tax implication.

However, from the investment and risk-taking point of view, the variable universal life insurance could be the best option as it provides more exposure to market fluctuations which can generate significant returns but could also result in substantial losses. But variable universal life insurance offers increased flexibility and growth potential over a traditional cash value or whole life insurance policies provided policyholders should carefully assess the risks before purchasing this type of policy.