A Comprehensive Family Protection Strategy

Examining a Possible Scenario: Meet John and Sarah

  • John – 31 years old, Software Engineer
  • Married to Sarah – 32 years old, Attorney
  • Purchased a home
  • Expecting their first child
  • Sarah plans to be a stay-at-home mom until their child is in school  
  • Their current debt – mortgage, student loans, auto loan

John and Sarah met with a financial professional who made several recommendations:

For John to purchase enough life insurance to protect his future income and their debt. 1
  • 20-year term life insurance, convertible for 10 years.
  • 30-year term life insurance, convertible for 20 years.
  • A small whole life insurance policy that will be paid-up at age 65.
  • Waiver of Premium Rider on all policies.

Layering Protection

This layering of term and whole life insurance is designed to protect John’s income at different stages of his career. The strategy assumes they will convert portions of his term life insurance, as increases to his whole life policy (as their budget allows). This will help provide the coverage they need near the end of John’s career and during retirement. The Waiver of Premium Rider will help protect the coverage by waiving the premiums in the event John becomes totally disabled and is unable to work. 2

Lastly, the strategy includes term coverage for Sarah as a non-employed spouse. Her term coverage is also convertible to whole life insurance, if needed in the future.

After all, Sarah’s role as primary caregiver in the family provides huge economic value. If she were to pass away, the life insurance coverage would help meet unexpected family expenses, such as paying for childcare. In addition, the coverage can help protect her future income when she eventually returns to the workforce.

scott

Source: Massachusetts Mutual Life Insurance Company (MassMutual) 2022

AT AGE 30
John’s protection needs are at their greatest. His earnings will be the only source of income for their growing family, and they have substantial debt. The combination of whole life and term life insurance will provide the protection they need.

AT AGE 40
John’s peak earning years are still ahead of him, and they will be saving for their child’s education. They will convert a portion of ’s 20-year term coverage to increase his whole life insurance. His total amount of life insurance protection will stay the same. He has the option to convert all or a portion of his 30-year term life policy over the next 10 years.

AT AGE 50
While John’s life insurance protection needs have decreased, he still has a lot of future income to protect as they focus on saving enough for retirement and paying for their child’s education. At age 50, his 20-year term coverage will end. He plans to convert an additional portion of his 30-year term policy to increase his whole life coverage.

AT AGE 60
John and Sarah hope to enjoy a secure and comfortable retirement. When John turns 60, his 30-year term life insurance policy will end. His whole life policy will provide the coverage they need between now and when he retires. The policy will be paid-up at age 65.

Scott and Jennifer

Their Protection Strategy in Review

Overall, John and Sarah’s strategy is a cost-effective way to get the life insurance protection they need while John’s career and their family are growing.

It also provides the flexibility to address their long-term protection needs with permanent life insurance as their budget allows, and life circumstances change.

Connect with a financial professional to explore the right protection strategy for you and your family.

Find a Financial Professional

1. Massachusetts Mutual Life Insurance Company (MassMutual), Creating a life insurance strategy that’s right for you, 2022.

2. There is an additional premium for most riders including the Waiver of Premium Rider. Eligibility for benefits is based on disability as defined in the rider.

IMPORTANT DISCLOSURES

Any guarantees explicitly referenced herein are based on the claims-paying ability of the issuing insurance company.

Product availability varies by carrier, state, and individual eligibility. Not all products listed are available in all states or to all applicants. Product descriptions on this page are for general informational purposes only and do not constitute a solicitation or offer to sell any specific insurance or annuity product. All products are subject to underwriting approval and applicable state insurance regulations. Riders and benefits are subject to additional charges, terms, conditions, and limitations. Variable products involve investment risk, including possible loss of principal, and are sold by prospectus. FundaDream Insurance Solutions, Inc. is a licensed California insurance corporation. Consult the applicable carrier contract for full terms, conditions, and limitations. FundaDream’s charitable giving is made from general corporate revenues at the sole discretion of FundaDream leadership and does not constitute compensation to any licensed insurance professional.

The decision to purchase life insurance should be based on long-term financial goals and the need for a death benefit. Life insurance is not an appropriate vehicle for short-term savings or short-term investment strategies. While the policy allows for loans, you should know that there may be little to no cash value for loans in the policy’s early years.

The information provided is not written or intended as specific tax or legal advice. FundaDream, its employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.

Insurance products and services are offered through FundaDream Insurance Solutions, Inc., California License No. 0M95835