|
Case Study 4 - Pension Replacement
Client: Married Couple - Husband - 75, Wife - 70
Home Value: $675,000, $100,000 mortgage
EquityKey Participation Rate: 100%
Investment Fee Received: $180,000
John worked for the government for 25 years and received a pension upon retirement. Unfortunately, there were no survivor benefits built in for his wife Irma. John was concerned because he knew that he was five years older than she and would likely pass before she would. Upon his passing, her income would be severely impacted by the loss of his pension and her Social Security, since it was less than his.
They wanted to put in place a solution that would financially protect Irma, so they applied for the EquityKey program. Fortunately, they both qualified and chose to each receive money from EquityKey by selling 100% of the future appreciation of their home to maximize the money they would receive.
With the $180,000 they received from EquityKey, they took $100,000 and paid off their outstanding mortgage, eliminating their monthly payment. With the remaining $80,000, they bought a life insurance policy on John. John was able to get $220,000 of life insurance death benefit that would pay out to Irma tax-free upon his passing. Assuming a 5% investment return on this death benefit, Irma could spend roughly $15,000 per year for up to 15 years. This gave them both peace of mind knowing that this would provide the necessary replacement income to help Irma maintain her lifestyle for the balance of her life. Their plan also left the $675,000 in home equity for their heirs.
*This is a hypothetical example only. Nothing in this example is intended to provide financial, tax or other estate planning advice. Please contact your financial, tax or other advisor concerning your options and what may be best suitable for you
|