Andy and Kaily are young, married professionals with a $150,000, 30-year fixed mortgage. They feel comfortable with their current mortgage payment, but could not afford it if either of their incomes were no longer available.
HMS Plus 125 CBO Solution
To help provide protection for their home and enough money to cover each other’s final expenses, Andy purchases a $175,000 HMS Plus 125 CBO policy at a rate of $93.40 a month, and Kaily purchases a $175,000 HMS Plus 125 CBO policy at a rate of $90.63 a month. For a total of $184.03 a month, Andy and Kaily each have $175,000 of coverage for 25 years. (Based on a 31 year-old male, non-nicotine and a 30 year-old female, non-nicotine.)
At the end of 25 years, each surrenders the policy to utilize the Cash Back Option. Andy receives a lump sum of $28,020 and Kaily a lump sum of $27,189. Together they can use this $55,209 any way they choose. They still have $42,670 left on the principal balance of their mortgage, so they use that amount to pay off their mortgage five years early. This saves them approximately $5,644 in interest payments, and they still have over $12,500 to spend as they wish.
Andy and Kaily needed life insurance to help protect their mortgage and their lifestyle. They ended up getting even more!