Life Insurance: Jack Wilson's Term Policy
Currently Jack Wilson has a group term policy provided through Texas Tech University at a cost of $5,472 a year. The policy provides a $200,000 death benefit but the cost of the policy keeps going up as Jack gets older. The goal of the life insurance section is to find the most cost effect way meet the goals of the surviving spouse in the event one spouse passes away prematurely. Life insurance should be purchased if the goals will not be met. We calculated the amount of life insurance that will be needed if the worst case scenario were to happen. The worst case timing for Jack to die would be right after retirement. If he passed away before taking TRS it could be switched to his wife and she would receive the full benefit instead …show more content…
The major financial loss would be Jane’s ability to earn money working part-time in retirement and Social Security.
The results are clear that Jack and Jane currently are not in need of any life insurance. Jack should drop his current life insurance coverage. If for some reason Jack wants to keep a policy he should look into other more economically viable options. The Texas Tech Group policy is becoming relatively expensive compared to other policies.
This section will be about analyzing the retirement goals that you have outlined. All assets are used to fund these goals besides the art and the jewelry. The goal is to allocate the assets so that all of the goals can be funded in the cost effect way possible. Below is the outline of all the goals that Jack and Jane have specified in our first meeting.
1. Living Expenses
a. Both retired $95,000
b. Surviving Spouse $76,000
2. Health Care
a. Fund medical expenses till …show more content…
Jane wants to work part-time when Jack retires making roughly $15,000 a year. She plans on continuing this till she is 72 years old.
Teachers Retirement Pension Analysis
Below is an analysis of Jack’s current pension options. There a several options of how to receive the pension and what the benefit will be at a specific age. We have factored in our longevity assumptions to come up with a lifetime benefit value that is stated below.
TRS Annuity Payment
Retirement Age Total Life Payments
Single Life Annuity
64 $ 40,205.88 $ 1,005,147.04
65 $ 44,863.06 $ 1,121,576.58
66 $ 49,763.49 $ 1,244,087.25
67 $ 54,917.57 $ 1,372,939.14
Joint Annuity 100%
64 $ 32,164.71 $ 900,611.75
65 $ 35,890.45 $ 1,004,932.61
66 $ 39,810.79 $ 1,114,702.18
67 $ 43,934.05 $ 1,230,153.47
Joint Annuity 75%
64 $ 34,315.72 $ 935,103.37
65 $ 38,290.62 $ 1,043,419.51
66 $ 42,473.14 $