Financial Planning Assignment - Life Insurance and Retirement

This assignment delves into key aspects of financial planning, examining two categories of life insurance: term and whole life insurance. It highlights the benefits of term life insurance, including lower costs and the option for conversion. The assignment further explores housing considerations for retirees, emphasizing the importance of financial strategies to avoid housing traps and manage mortgage payments. Additionally, it addresses social security benefits, detailing income replacement functions, eligibility, and the impact of early retirement on benefits, along with the earning test for those who continue to work. The assignment provides a comprehensive overview of insurance, retirement, housing, and social security.

Running head: QUESTIONS 0
FINANCIAL PLANNING
MARCH 13, 2020
STUDENT DETAILS:

QUESTIONS 1
Answer 1:
There are two categories of life insurance companies. These two categories are term life
insurance companies as well as whole life insurance companies. The term life insurance is
popular category of life insurance companies. Term life insurance companies are the companies
that offer plan providing comprehensive financial coverage in against of premium paid for
limited time to receiver. The term life insurance plans come with death benefits at the time of
unexpected demise of the holder of policy during the policy term. In contrast, whole life
insurance companies offer policy that is assured to be remain effective for whole insured life,
provided the premium is paid on maturity date (Chaudhary, 2016).
Answer 2:
Most of the term life policies have option to change term life policy into the Whole Life
insurance policy. It can be helpful for the individual who bought term life policy with chosen
rating class and later identified with a situation that will make it critical to qualify for new policy
(Attard, 2019). Following are the benefits, features and types of term life insurance policy –
Advantages of term life insurance policy –
a. Lower cost
b. Insurance security for temporary period
c. Renewable policy
d. Can be converted into permanent life insurance
e. No cash
Features of term life insurance policy –

QUESTIONS 2
a. Easy to purchase policy
b. Reasonably priced for buyer
c. Staggered Claims Pay out Option
d. Term Plan with Return of Premium
e. Flexible payment of premium
f. Rebate to opt high sum assured in term life insurance plan
Policy categories of term life insurance policy –
a. Level term – It states that death benefit remains similar through policy term.
b. Decreasing term – it means death benefit drips, normally within the 1 year increment,
over course of term of policy.
Answer 3:
The change in the housing states that the retirees can be changed from residing on their
own to different way of housing, like assisted living or autonomous living in the
retirement communities that combines support with housing. Additionally, the best way to avoid
housing trap is to keep money in the market in place of paying down mortgage in a quick way. It
can see that one can have good as well as bad time. One can face the problem of unemployment.
In this way, it is required to have money earning to give more than enough wealth for paying off
mortgage (Acharya, 2018).
Answer 4:
The function of Social Security benefits replace the income from work because of
the retirement, over period the benefits expanded to get advantages for spouse as well as

QUESTIONS 3
survivor. This benefit is available at the age of 62. It cans see that the social security receivers
received 1.6 % increase for 2020. It was 2.8 % increase for 2019 (Garg & Mehta, 2019).
Further, in the case of early retirement, it is decreased 5/9 of 1% for every month before
the retirement age, up to thirty-six months. In case of exceeding 36 months, the benefit will be
furthermore decreased 5/12 of 1% each month. Further, if a person claims the benefits and
continue to work, there is an earning test until attaining the age of retirement, 66 to 67 years,
depending on born year.

QUESTIONS 4
References
Acharya, A. (2018). Understanding the perceptions of indian college students towards life
insurance and their preferences on researching & purchasing the same. International
Journal of Research in Social Sciences, 8(3), 233-248.
Attard, M. (2019). An analysis on the factors leading to take life insurance. USA: Routledge
Chaudhary, S. (2016). Consumer Perception Regarding Life Insurance Policies: A Factor
Analytical Approach. Pacific Business Review International, 9(6), 52-61
Garg, V., & Mehta, S. (2019). A study on factors affecting life insurance premium: Case of
India. International Journal of Research in Social Sciences, 9(6), 496-504.