Comparative Study of Life Insurance Policies

Comparative Study of Life Insurance Policies

Final Report
Prepared for Billy Ma
Prepared by
Student’s name
Date
TABLE OF CONTENTS
TABLE OF FIGURES
TOC h z c “Figure” Figure 1: Agency ratings of top companies PAGEREF _Toc458252974 h 5Figure 2: client’s cash flow worksheet PAGEREF _Toc458252975 h 6Figure 3: Twenty-year term policy structure PAGEREF _Toc458252976 h 7Figure 4: client’s cash flow report PAGEREF _Toc458252977 h 8Figure 5: Thirty year term policy breakdown PAGEREF _Toc458252978 h 9Figure 6: AM best data life insurance company ratings PAGEREF _Toc458252979 h 11Figure 7: client’s cash flow report PAGEREF _Toc458252980 h 12Figure 8: whole life policy structure PAGEREF _Toc458252981 h 12Figure 9: cash value accumulation PAGEREF _Toc458252982 h 13Figure 10: AM best data ratings of Life Insurance Company PAGEREF _Toc458252983 h 15Figure 11: client’s cash flow report PAGEREF _Toc458252984 h 16Figure 12: options score under reliability PAGEREF _Toc458252985 h 18Figure 13: option comparison under reliability PAGEREF _Toc458252986 h 18Figure 14: life insurance companies score under reliability PAGEREF _Toc458252987 h 19Figure 15: comparison of life insurance policies under reliability PAGEREF _Toc458252988 h 19Figure 16: premium payments of whole life policy, balance and condition PAGEREF _Toc458252989 h 20Figure 17: premium payments of thirty year term policy, balance and condition PAGEREF _Toc458252990 h 21Figure 18: premium payments of twenty year term policy, balance and condition PAGEREF _Toc458252991 h 21Figure 19: premium payments of custom whole life policy, balance and condition PAGEREF _Toc458252992 h 22Figure 20: options weight score under affordability PAGEREF _Toc458252993 h 22Figure 21: comparison of options under affordability PAGEREF _Toc458252994 h 22Figure 22: factors under coverage PAGEREF _Toc458252995 h 24Figure 23: options score of each factor under coverage PAGEREF _Toc458252996 h 25Figure 24: comparison of options under coverage criterion PAGEREF _Toc458252997 h 25Figure 25: Final ranking PAGEREF _Toc458252998 h 27
Introduction
Topic
This paper researches on the different life insurance policies that are fit for Billy Ma as it will be useful in the provision of financial protection for his family factoring in many risks inherent.

Purpose of the research project
The purpose of this research study is to help to choose the better life insurance policy for the client. Following the increase of responsibilities and financial needs cumulatively, a need for protection of future finances is necessary. This research will evaluate different life insurance policies factoring in various criteria that best fits this situation. I have presented different options and evaluative criteria that will help you in understanding and making the right decision regarding the insurance policy. This paper, therefore, identifies the condition of Billy Ma’s level of income, termination of Tracey’s job and newborn baby. Life insurance policy will help in securing the financial security of the family.
Minimum specifications
Following our discussions, I have analyzed the situation in this case with requirements and managed to come up with minimum specifications that the [policy should meet as indicated below.
• Should be affordable
• Premiums to be paid from Billy’s salary
• Proceeds should meet the family’s financial needs
• The insuring company will meet the credits of reliability
• Reasonable coverage as per Bill’s requirements
• The policy will have a cash value at its maturity
• The policy will guarantee the family’s survival for a period not less than six months
Options
This paper considers four primary policies that best suits the client. The options have been thoroughly researched with the right information and are stipulated below. These alternatives considered are derived from updated information on the sources.
The first option is a 20-year term life insurance policy. This policy requires the client to pay premiums on a monthly basis for twenty years. The proceeds will be paid to the client after the end of the twenty years period or to the beneficiaries of the .” upon the occurrence of death within the period.
The second option is a thirty-year term life insurance policy whose requirements need the client to pay premiums on monthly terms for the period of thirty years. The policy covers the client for thirty years, and the proceeds will be paid at maturity or expiration of the policy.The proceeds too will be paid in between the period to expiration upon the occurrence of death.
Whole life policy will be the third alternative, and it covers the entire period of the client’s life. The client will be expected to pay premiums on a monthly basis till the expiration of the policy. The policy matures upon the occurrence of death, and the proceeds will be paid to the beneficiaries. The whole life policy is a contract between the parties in which the premiums paid keeps the agreement in force. The insurer will pay the death benefit incase the client passes on.
The last alternative is a custom whole life policy which requires the client to decide the timing of making premium payments. The premiums are paid for the period in which the clients deems fit. Other features in this option will include the option to withdraw the accumulated cash value. The policy too has a supplemental retirement income at its maturity.
As stated in the proposal and the progress report, the research will stick to these options in selecting the best policy for Billy’s family. Therefore, the options indicated above have not changed and will be used specifically for purposes of this research. The alternatives give a wider scope and range of study, with detailed information, and I consider it necessary as the right judgment would arrive.
Evaluative criteria
In choosing the best life insurance policy for this particular case, I will consider the following criteria that factor in the current life situation, the present flow of finances both inflow and outflow, the age of the client, beneficiaries and life expectations as a whole. Below are the criteria to be used for this research for evaluation, presented in a bulleted list.
• Reliability
• Affordability
• Coverage
• Cash or no cash value
Purpose of the Data Report
The data report is aimed at presenting all the data gathered and used in this research. The report is meant to highlight relied upon data for each option and the evaluative criteria. The information is crucial as it helps gain deeper insights for comparisons and the validity of each option. I have presented the information in an efficient way that guides you in comparing the four options against the criteria. It would be easy for you in determining the best option that best meets your minimum specifications as you will have all the necessary data for this task. The report captures all the criteria in reliability, coverage, affordability, and cash value. As this report contains all the options and criteria indicated in this research study, you will be able to make the right decision regarding the choice of life insurance policy. The best insurance policy will be in a position to provide financial protection for your family.
Contents of the Data Report
This report is divided into three main parts that include the introduction, the research data, and the bibliography section. The introduction section contains general information concerning the research topic. As you will see, I have clearly indicated the topic and purpose of the research clearly. I have also included subsections that cover on the minimum specifications for the policy, the criteria and also the options to be compared. In the research data section, I have organized the information regarding options discussed here and accompanied by data on evaluative criteria. The information presented herein is sufficient and factual that is meant to support the options and criteria. As you will see, there are footnotes and endnotes too that are the to give a proof of credibility of the information presented in this data report. Each work relied upon has to be cited and therefore this data report includes a bibliography section at the end. The sources are presented using MLA format for this documentation.
RESEARCH DATA
20-Year Term Insurance Policy
Reliability
On the case of reliability, we consider different companies that offer 20-year term insurance policy in a reliable way. The twenty-year term insurance policy is offered by several international and reliable companies. I have narrowed down my analysis to two regarding that are discussed below together with relevant data to access on their reliability.
MetLife insurance company
MetLife insurance company is a global insurance that leads in the provision of short-term life insurance policies. The company holds a bigger market share globally across the United States, European countries, Asia and Africa. The intensive investment of subsidiaries all over the world has earned a greater number of clients. MetLife has been in operation for over hundred years offering life insurance policies for diverse clients. It is recognized as a global brand with its services being appreciated by clients and international bodies. The company has been effectively executing client’s claim that holds a policy with them. The many subsidiaries across the country provide an avenue for consultation and access of information.
According to rating companies in the United States, the company is among the leading players regarding reliability and credit ratings. The following table indicates this.
A.M Best company Fitch ratings Moody’s Investors
American life insurance company A+ Not rated A1
1stMetLife insurance company A+ AA+ Aa
MetLife insurance company USA A+ AA-2 A+
MetLife insurance KK AA- Not rated Not rated
Key
A+
AA
AA-
AA-2
A1
Aa Superior
superior
excellent
very strong
upper medium
high quality
Figure SEQ Figure * ARABIC 1: Agency ratings of top companies
Prudential insurance company
The prudential financial has been in operation for the last one hundred and forty years are giving its customers sufficient satisfaction. The company has helped thousands of individuals in securing financial security and stability. From the reviews of the customers, the company is known for delivering the promises made in the agreement. This makes prudential a trusted brand with extremely receiving world’s admiration and trust. The company has opened subsidiaries in all the continents of the world establishing a strong financial base. The broad diversification of the assets secures it from any form of threat such as liquidation. The company provides professional advice and is widely involved in helping individuals chose a better policy. .” what drives the so-called “the strength of prudential.”
Affordability
The table below gives a breakdown of financial flows on the monthly basis. It is divided regarding inflows and outflows including identification of the specific item. This information relies on our earlier discussion and interviews held on a start of this project. I have also considered the financial reports, bank statements, and credit card report.
Monthly income and expenditure spreadsheet
Inflows Amount in $ Outflows Amount in $
1. Salary 8000 debt repayment 6400
2. Business Income 4500 Housing 1800
3. Dividends 1200 Utilities 900
4. Other Investment Income 1900 Groceries 100
5. Other income 1500 Living 1700
6. Transportation 1380
7. Healthcare 250
8. Personal 560
9. Entertainment 120
10. Business expenses 1190
Other expenses 520
Totals 17,100 14,920
Figure SEQ Figure * ARABIC 2: client’s cash flow worksheet
The table below shows twenty-year term policy with policy terms. I have broken down the policy options regarding amount the insured and also calculating monthly payments.
Twenty-year term policy
Amount insured Period Amount of premiums paid
1 million 20 years 3,000
2 million 20 years 7,000
3 million 20 years 10,000
4 million 20 years 15,000
5 million 20 years 22,000
7 million 20 years 35,000
Figure SEQ Figure * ARABIC 3: Twenty-year term policy structureThe above terms have been derived from the company’s database and adjusted to fit the market prices. Also, the data reflects the actual figures paid for this type of policy.
Coverage
This policy covers the client for twenty years. I have noted that the client is forty years old, and the wife is 28 years old. The policy will cover the client up to the age of sixty years. By the end of twenty years, Tracey will be forty-eight years old while their son will be twenty years old. The client is of the male gender. The gender is crucial as it is a factor in determining the life span of individuals. Statistics indicate that the female gender has a long life span compared to the male gender. Insights into the client’s medical examinations show that there are no sensitive medical complications that ought to be factored in this part for evaluation. The death benefit and premiums paid are indicated in the above table under affordability section.
Cash or no cash value
The twenty-year term policy does not accumulate cash value as it is meant to protect the family in cases of death of the breadwinner. This policy will only provide security for the period under the agreement. The proceeds on the occurrence of the death within the twenty years will be paid to the beneficiaries and will be used to cater for the family’s survival meeting basic needs such as housing and school fees.
30-Year Term Policy
Reliability
The following companies offer thirty-year term policy. My analysis has narrowed down to these companies to access their reliability.
Prudential insurance company
As indicated above, the prudential financial has been in operation for the last one hundred and forty years are giving its customers sufficient satisfaction. The company is well known for the provision of term life insurances. The company has helped thousands of individuals in securing financial security and stability. From the reviews of the customers, the company is known for delivering the promises made in the agreement.
This makes prudential a trusted brand with extremely receiving world’s admiration and trust. The company has opened subsidiaries in all the continents of the world establishing a strong financial base. The broad diversification of the assets secures it from any form of threat such as liquidation. The company provides professional advice and is widely involved in helping individuals chose a better policy. This is what drives the so-called “the strength of prudential”.
MetLife insurance company
MetLife insurance company is a global insurance that leads in the provision of term life insurance policies. The company holds a bigger market share globally across the United States, European countries, Asia and Africa. The intensive investment of subsidiaries all over the world has earned a greater number of clients. MetLife has been in operation for over hundred years offering life insurance policies for diverse clients. It is recognized as a global brand with its services being appreciated by clients and international bodies. The company has been effectively executing client’s claim that holds a policy with them. The many subsidiaries across the country provide an avenue for consultation and access of information.
According to rating companies in the United States, the company is among the leading players regarding reliability and credit ratings.
Affordability
The table below gives a breakdown of financial flows on a monthly basis. It is divided regarding inflows and outflows including identification of the specific item. The miscellaneous expenses have been grouped together. This information relies on our earlier discussion and interviews held at the start of this project. I have also considered the financial reports, bank statements, and credit card report.
Monthly income and expenditure spreadsheet
Inflows Amount in $ Outflows Amount in $
1. Salary 8000 debt repayment 6400
2. Business income 4500 Housing 1800
3. Dividends 1200 Utilities 900
4. Other Investment Income 1900 Groceries 100
5. Other income 1500 Living 1700
6. Transportation 1380
7. Healthcare 250
8. Personal 560
9. Entertainment 120
10. Business expenses 1190
Other expenses 520
Totals 17,100 14,920
Figure SEQ Figure * ARABIC 4: client’s cash flow report
The table below shows twenty-year term policy with policy terms. I have broken down the policy options regarding the amount the insured and also calculating monthly payments.
Thirty – year term policy Amount insured Period Amount of premiums paid
7 million 30 years 500
9 million 30 years 800
12 million 30 years 1200
15 million 30 years 3000
20 million 30 years 4000
30 million 30 years 4500
Figure SEQ Figure * ARABIC 5: Thirty year term policy breakdown
The above terms have been derived from the company’s database and adjusted to fit the market prices. Also, the data reflects the actual figures paid for this type of policy.
Coverage
As the name suggests, the policy will cover the client for thirty years. You provided me with your information indicating that you are forty years old while your wife Tracey is twenty-eight years. The expiration of this policy shows that you will be seventy years old while your Tracey will be fifty-eight years old. Your son will be thirty years old.
Also, the personal information indicates male gender with both male and female dependents. Insights into the client’s medical examinations show that there are no sensitive medical complications that ought to be factored in this part for evaluation. The above table under affordability indicates the death benefit to be paid as well as the expected monthly premiums.
Cash or no cash value
The structure of this policy does not accumulate cash value as its primary goal is to protect the family financial status within the period insured. The proceeds on the occurrence of the death within the thirty years will be paid to the beneficiaries and will be used to cater for the family’s survival meeting basic needs such as housing and education purposes. The insurer will only pay the death benefit.
3. Whole life policy
Reliability
As noted earlier, whole life policy has to be covered by the company that is strong grounds regarding reliability. Below information represents companies that could be used for this purpose concerning the business’s history and background. The report presents insights based on ratings, reviews, financial stability, and efficiency in execution, reputation, and access to information. The information also rests on the provision of the service regarding operation backgrounds and competitive ability in the field.
The data is based on A.M best data and presents the best life insurance companies with top ratings on whole life policy provision.
Insurance company Percentage market share Superior rating Policies offered Special features
1. Northwestern Mutual 8.46% market share AA+ superior rating Whole life
Universal life
Variable life A hybrid term
Whole life product
2. New York life Insurance 5.74 % market share A++ Superior rating Term life
Whole life
Universal life Corporate sponsored life insurance
3. Met life-metropolitan life and affiliated Cos 5.26% market share A+ superior rating Term life
Whole life
Universal life Acceptance of whole life policy is guaranteed
4. Lincoln Financial group 4.96% market share A+ superior rating Term life
Whole life
Indexed Universal life
Variable universal life 5. John Hancock Financial 4.16% market share A+ superior rating Term life
Whole life
Indexed Universal life
Variable universal life Discounts offered to customers leading a descent lifestyle such as regular exercises and health screening
6. Prudential Financial 3.91% market share A+ superior rating Term life
Whole life
Survivorship life
Universal life 7. Mass Mutual 3.82% market share A++ Superior rating Term life
Whole life
Universal life
Variable universal life Acceptance of whole life policy is guaranteed
8. State Farm Life 3.6% market share A++ Superior rating Term life
Whole life
Universal life Life insurance customer satisfaction in 2015
9. Transamerica 3.57% market share A+ superior rating Term life
Whole life
Universal life
Variable universal life 10. American International Group (AIG) 2.87% market share A superior rating Term life
Whole life
Universal life
Variable life
Indexed universal life 11. Guardian Life 2.72% market share A++ Superior rating Term life
Whole life
Universal life
Variable universal life 12. Pacific life 2.65% market share A+ superior rating Term life
Universal life
Indexed universal life
Variable universal life 13. Axa 2.56% market share A+ superior rating Term life
Whole life
Universal life
Indexed universal life
Variable universal life 14. Protective life 2.07% market share A+ superior rating Term life
Universal life
Variable universal life
Survivorship life Figure SEQ Figure * ARABIC 6: AM best data life insurance company ratingsAffordability
These criteria will also use data presented in the previous examples in evaluating the affordability of this policy. We first consider your expenditure and income items before proceeding to present data on the particular expenses in this form of policy.
The table below gives a breakdown of financial flows on a monthly basis. It .” regarding inflows and outflows including identification of the specific item. The miscellaneous expenses have been grouped together. This information relies on our earlier discussion and interviews held at the start of this project. I have also considered the financial reports, bank statements, and credit card report.
Monthly income and expenditure spreadsheet
Inflows Amount in $ Outflows Amount in $
1. Salary 8000 debt repayment 6400
2. Business income 4500 Housing 1800
3. Dividends 1200 Utilities 900
4. Other Investment Income 1900 Groceries 100
5. Other income 1500 Living 1700
6. Transportation 1380
7. Healthcare 250
8. Personal 560
9. Entertainment 120
10. Business expenses 1190
Other expenses 520
Totals 17,100 14,920
Figure SEQ Figure * ARABIC 7: client’s cash flow report
Considering the top companies indicated under reliability section, I have analyzed the whole life policy regarding premium payment. The information presented represents the market prices that are adopted by the companies at 0.1% deviations.
No Death benefit Monthly premiums paid Annual payments
1,000,000 760 9120
4,000,000 800 9600
8,000,000 1100 13200
15,000,000 1500 18000
30,000,000 2500 30,000
35,000,000 3500 42,000
Figure SEQ Figure * ARABIC 8: whole life policy structureCoverage
The whole life policy is a cover that is designed to cover the client for the rest of his life. The policy is kept in force through payment of premiums. As long as the client doesn’t terminate the contract through taking the surrender value, the policy will also remain in force until when the client dies. This policy as the name suggests will be in force for the rest of client’s time. It will cover you from the age of forty years till death holding that all the requirements will be followed. As indicated earlier, the medical report indicates that there are no major complications that ought to be highlighted in this research study in highlighting coverage. I noted that you have been leading a healthy lifestyle. This is drawn from the regular exercises and medical examinations. The premiums to be paid in both monthly and annually have been indicated in the above table under affordability section. It also indicates the death benefit in different options categorically stating the rate of premiums to be paid.
Cash or no cash value
This policy is designed to provide financial protection that has a savings feature. The new financial services differentiate the cash value and the face value that are offered in whole life policy. According to its website, the whole life policy pays cash value “and it is the amount that accumulates over a period on the policy while the face value is the policy amount that is paid as death benefit. The insurance law determines the minimum amount, and it shows the accumulation of premiums after the allowances and expenses are paid.As shown in the table below, the face value will be high in the first years and low as the number of year’s increases. The face value will also be paid in times of surrender instead of the face value. The policy allows the client to withdraw the cash value in the the period before expiration. In this policy, there are availabilities of loans offered by the company to the client against the cash value accumulated. The loans are provided at lower interest rates than the normal loans offered by financial institutions. As noted, the cash values accumulated decreases over the period due to increased risk of death.
Death benefit Policy Accumulated cash value
1,000,000 Initial 10 years 700,000
10-20 years 500,000
20-40 years 400,000
8,000,000 Initial 10 years 2,000,000
10-20 years 1,500,000
20-40 years 1,000,000
30,000,000 Initial 10 years 8,000,000
10-20 years 4,000,000
20-40 years 2,000,000
Figure SEQ Figure * ARABIC 9: cash value accumulationCustom whole life policy
Reliability
Custom whole life policy is offered by different companies across the United States. Below information represents companies that could be used for this purpose concerning the company’s history and background. The information presents insights based on ratings, reviews, financial stability, and efficiency in execution, reputation, and access to information. The information also is based on the provision of the service regarding operation backgrounds and competitive ability in the field.
The data is based on A.M best data ad presents the best life insurance companies with top ratings on whole life policy provision.
Insurance company Percentage market share Superior rating Policies offered Special features
1. Northwestern Mutual 8.46% market share AA+ superior rating Whole life
Universal life
Variable life A hybrid term
Whole life product
2. New York Life Insurance 5.74 % market share A++ superior rating Term life
Whole life
Universal life Corporate sponsored life insurance
Only company to offer custom whole life policy
3. Met life-metropolitan life and affiliated Cos 5.26% market share A+ superior rating Term life
Whole life
Universal life Acceptance of whole life policy is guaranteed
4. Lincoln Financial group 4.96% market share A+ superior rating Term life
Whole life
Indexed Universal life
Variable universal life 5. John Hancock financial 4.16% market share A+ superior rating Term life
Whole life
Indexed Universal life
Variable universal life Discounts offered to customers leading a descent lifestyle such as regular exercises and health screening
6. Prudential Financial 3.91% market share A+ superior rating Term life
Whole life
Survivorship life
Universal life 7. Masss Mutual 3.82% market share A++ superior rating Term life
Whole life
Universal life
Variable universal life Acceptance of whole life policy is guaranteed
8. State Farm Life 3.6% market share A++ Superior rating Term life
Whole life
Universal life Life insurance customer satisfaction in 2015
9. Transamerica 3.57% market share A+ superior rating Term life
Whole life
Universal life
Variable universal life 10. American International Group (AIG) 2.87% market share A superior rating Term life
Whole life
Universal life
Variable life
Indexed universal life 11. Guardian life 2.72% market share A++ superior rating Term life
Whole life
Universal life
Variable universal life 12. Pacific Life 2.65% market share A+ superior rating Term life
Universal life
Indexed universal life
Variable universal life 13. Axa 2.56% market share A+ superior rating Term life
Whole life
Universal life
Indexed universal life
Variable universal life 14. Protective Life 2.07% market share A+ superior rating Term life
Universal life
Variable universal life
Survivorship life Figure SEQ Figure * ARABIC 10: AM best data ratings of Life Insurance Company
Affordability
The table below gives a breakdown of financial flows on a monthly basis. It is divided regarding inflows and outflows including identification of the specific item. The miscellaneous expenses have been grouped together. This information relies on our earlier discussion and interviews held at initial stages of this project. I have also considered the financial reports, bank statements, and credit card report.
Monthly income and expenditure spreadsheet
Inflows Amount in $ Outflows Amount in $
1. Salary 8000 debt repayment 6400
2. Business income 4500 Housing 1800
3. Dividends 1200 Utilities 900
4. Other Investment Income 1900 Groceries 100
5. Other income 1500 Living 1700
6. Transportation 1380
7. Healthcare 250
8. Personal 560
9. Entertainment 120
10. Business expenses 1190
Other expenses 520
Totals 17,100 14,920
Figure SEQ Figure * ARABIC 11: client’s cash flow reportAccording to New York life Insurance Company, the policy is issued to people under the age of seventy years. The minimum face amount that can be offered in this form of policy is $50,000. The premiums will be paid in either semiannually or annually terms. This policy also has periodic payment options for accessing the cash values when the policy is paid up entirely.
Coverage
This policy covers the whole period of the client. Its structure requires the client to pay premiums at designated time according to the customer’s ability to pay. The policy will remain in force for payment of premiums and completion of policy payment. It will cover you from the age of forty years till death holding that all the requirements will be followed. As indicated earlier, the medical report shows no major complications that ought to be highlighted in this research study for coverage. I noted that you have been leading a healthy lifestyle with regular exercise and medical examinations.
Cash or no cash value
Like it in the whole life policy, custom whole life policy borrows some features regarding payment of money value. The policy accumulates a tax-deferred cash value. The cash value provided will provide a specific financial objective. The custom whole life policy creates a cash value that is enough in providing income for retirement, education and family survival.
ANALYSIS OF DATA
This section of the report presents analysis of data under this research project. The data collected and presented in the data report will be analyzed under this section. Mainly, I will be comparing the project options for the best ratings and applicability in each evaluative criterion. It will help n identifying the best option among the four options under a specific criterion. As discussed earlier in this report, I adopted four options for evaluation in this research study and they include the twenty year term life policy, thirty year term policy, whole life policy and custom life policy. These options therefore will be compared under the following criteria which were also discussed under data report. The criteria to be considered include reliability, affordability, coverage and cash or no cash value. The comparison of each option will therefore be significant in identifying the best option under each criterion. I will therefore identify the best option that will be coupled up with a discussion of the remaining options identified in according to their ranking. Further, this section also will present the similarities and differences in the options for each specific criterion. For the purposes of clarity and proper analysis, I have attached all the graphics work that I used for analysis and in support of the decision made. The graphs are well presented in an organized way that will enable you to identify the order of placement and rank according to a specific criterion.
Reliability
The data presented in this report indicates that whole life policy is the best policy that can be offered by all the listed top companies. The policy too can be covered efficiently in terms of full execution and timely satisfaction to the clients. The companies have been listed and ranked according to their reliability on provision of this service. Also, whole life policy is best offered by the top companies with best ratings. The companies too have been analyzed to access their market share hence better reliability. The data shows that whole life policy has a bigger percentage in terms of provision by all the companies. Among the fourteen reliable companies in the information gathered, whole life policy is offered by all the companies giving a percentage of 100%. The twenty year policy is offered by 12 companies out of 14 indicating a percentage of 85%. However, for efficiency and effectiveness among the companies, only two companies can be relied and this includes met-life insurance company and New York life insurance. Just as the twenty year policy, the thirty year policy lies in the same category of short term policies in terms of provision. It is offered by 12 companies out of 14 indicating a percentage of 85%. New York life insurance and met life insurance company remains the best companies in provision of this certain type of policy. The last option in terms of reliability as offered by these companies is the customized whole life policy. It is offered by eight companies out of the top fourteen companies indicating a percentage of 57.14%. In comparison of the above policies, these policies can be ranked as follows:
Whole life insurance policy
Twenty year term insurance policy
Thirty year term insurance policy
Custom made insurance policy
Option Score (%)
1. Whole life insurance policy
100
2. Twenty year term insurance policy 85
3. Thirty year term insurance policy
85
4. Custom made insurance policy
57.14
Figure SEQ Figure * ARABIC 12: options score under reliability
Figure SEQ Figure * ARABIC 13: option comparison under reliabilityThe above graph shows that whole life insurance policy has high score compared to the other options. Twenty-year term policy and thirty-year term policy both have the same score while the custom made policy has the least score.
Moreover, the companies too can be ranked regarding reliability levels. The higher levels were accorded to those undertakings with strong background and history, the percentage of market share and unique features offered by the firm in each type of policy. It is also worth noting that the kinds of policies that were provided were critical in determining the ranks of businesses. Finally, the ratings from the A.M best data ratings were also considered. The businesses can, therefore, be rated as follows for reliability. The least score represents great superiority.
Insurance company Percentage market share Superior rating Policies offered Special features Total Score Percentage score in reliability levels
1. Northwestern Mutual 1 2 4 3 10 2.5 40
2. New York life Insurance 2 2 1 1 6 1.5 66.67
3. Met life-metropolitan life and affiliated Cos 1 1 2 1 5 1.25 80
4. Lincoln Financial group 3 3 1 5 12 3 33.33
5. John Hancock Financial 2 5 2 1 10 2.5 40
6. Prudential Financial 5 2 3 5 15 3.75 26.67
7. Mass Mutual 5 2 1 4 12 3 33.33
8. State Farm Life 5 4 3 2 14 3.5 28.57
9. Transamerica 5 4 2 5 16 4 25
10. American International Group (AIG) 5 5 2 5 17 4.25 23.53
11. Guardian Life 5 3 4 5 17 4.25 23.53
12. Pacific life 4 5 4 5 18 4.5 22.22
13. Axa 3 5 1 5 14 3.5 28.57
14. Protective life 5 4 5 5 19 4.75 21.05
Key
Excellent
Very good
Good
Fair
Poor Figure SEQ Figure * ARABIC 14: life insurance companies score under reliability
Figure SEQ Figure * ARABIC 15: comparison of life insurance policies under reliabilityFrom the above graph, it is indicated that the met life insurance companies have high scores followed closely by New York insurance company. Prudential Financial has the least score in this comparison of businesses. The minimum specifications require the policy to be covered by a reliable company. Therefore the analysis has been based on ratings, reviews, financial stability, and efficiency in execution, reputation, and access to information.
Affordability
The analysis of affordability will consider the data gathered regarding clients financial flows both inflow and outflow. It will include the customer’s income and debts to determine whether the client will be in a position to pay for the insurance policy. Also, the data will factor of premiums paid in a particular system.
According to the rates given in the data section, whole life policy offers premiums that are favorable to this particular client regarding affordability. The data shows that the customer has an extra 2,180 dollars that are available after all the necessary deductions. This can be found on the data sheet that represents all the inflows and inflows. Further, factoring the amount that goes into monthly savings, the client is left with approximately 1,180 dollars. The data below shows a breakdown of the options starting with the most affordable. 30 –year term policy is the second ranked according to affordability followed by twenty-year term plan and finally the custom made policy is the last.
1. Whole life insurance policy
2. Thirty-year term insurance policy
3. Twenty-year term insurance policy
4. Custom whole life policy
Whole life insurance policy
No Death benefit Monthly premiums paid Amounts available for payment Balance Condition
1,000,000 760 1180 420 Affordable
4,000,000 800 1180 380 Affordable
8,000,000 1000 1180 180 Affordable
15,000,000 1100 1180 80 Affordable
30,000,000 2500 1180 -1320 Not affordable
35,000,000 3500 1180 -2320 Not affordable
Figure SEQ Figure * ARABIC 16: premium payments of whole life policy, balance and conditionThirty year term policy
Thirty – year term policy
Amount insured Period Amount of premiums paid Amounts available for payment Balance Condition
7 million 30 years 500 1180 680 Affordable
9 million 30 years 800 1180 380 Affordable
12 million 30 years 1100 1180 80 Affordable
15 million 30 years 3000 1180 -1820 Not affordable
20 million 30 years 4000 1180 -2820 Not affordable
30 million 30 years 4500 1180 -3320 Not affordable
Figure SEQ Figure * ARABIC 17: premium payments of thirty year term policy, balance and conditionTwenty year term life policy
Twenty-year term policy
Amount insured Period Amount of premiums paid Amounts available for payment Balance
Condition
1 million 20 years 980 1180 200 Affordable
2 million 20 years 1100 1180 80 Affordable
3 million 20 years 10,000 1180 -8820 Not affordable
4 million 20 years 15,000 1180 -13820 Not affordable
5 million 20 years 22,000 1180 -20820 Not affordable
7 million 20 years 35,000 1180 -33820 Not affordable
Figure SEQ Figure * ARABIC 18: premium payments of twenty year term policy, balance and conditionCustom whole life policy
Amount insured Monthly amount available for payment Payment option
Annually
Semi-annually
Amount of premiums paid
Amounts available for payment Balance
Condition Amount of premiums paid Amounts available for payment Balance
Condition
1 million 1180 7000 7080 2080 Affordable 14,000 14,160 4160 Affordable
2 million 1180 7500 7080 -420 Not affordable 15000 14,160 -840 Not affordable
3 million 1180 12500 7080 -5420 Not affordable 25000 14,160 -10840 Not affordable
4 million 1180 15400 7080 -8320 Not affordable 30800 14,160 -16640 Not affordable
5 million 1180 16,000 7080 -8920 Not affordable 32000 14,160 -17840 Not affordable
7 million 1180 17000 7080 -9920 Not affordable 34000 14,160 -19840 Not affordable
Figure SEQ Figure * ARABIC 19: premium payments of custom whole life policy, balance and conditionThe table below shows a comparison of all the four options available. I have attached weights to each option according to the above analysis of affordability. You should see and identify the most affordable option towards the most expensive as they have been arranged in a series starting with the most affordable.
Option type No of options affordable Weight Percentage
Twenty year term policy 2 0.33 33%
Thirty year term policy 3 0.5 50%
Whole life insurance policy 4 0.67 67%
Custom made policy 1 0.17 17%
Figure SEQ Figure * ARABIC 20: options weight score under affordability
Figure SEQ Figure * ARABIC 21: comparison of options under affordabilityThe graph above indicates that whole life insurance policy can be managed by the client as it is highly affordable compared to the rest of the options. It has a percentage of sixty seven followed closely by thirty year term policy that has a percentage of fifty. The third option I this category is twenty year term policy that has a percentage rate of thirty three. Finally, custom whole life policy is the most expensive as its percentage rate of affordability is at seventeen percent.
Affordability is one of the most crucial specifications in this research study. It determines whether the client will manage to keep the policy in force or not. In all the above options presented, the premiums paid are the core element that keeps the policy in place thereby ought to be considered.
For the whole life policy, the client will manage to pay for the first four policies in terms of the death benefit as indicated. He will be in a position to pay one million, four, eight or fifteen million with the current amount of income and expenses. Any policy exceeding eight million will be unaffordable hence in efficient.
The thirty year term policy is quite affordable and according to the data analyzed above, with the current rates of inflows and outflows, the client will manage to pay for only three types of options up to twelve million. Moreover the balances after the payment of the affordable policies are too little and show that it won’t meet the precautionary aspects of the client. As it is indicated by the twenty year term policy, the short term life policies are quite expensive compared to the longer terms. The client will only manage to pay for only two types of policies with the policy value not exceeding two million. It is due to the shorter period in which the client has to pay the premiums or be covered. The high amounts of premiums drains almost all the clients balances with the most being only two hundred dollars. Therefore this policy is expensive for the client to manage.
The last option which is the custom whole life policy is considered as the most expensive policy in this category. Despite the policy being considered by financial analysts as the friendliest policy, it contradicts our situation in this research project. The policy is designed and structured to cater for clients’ needs as one chooses the appropriate timings and amount to be paid in a policy. This adjustment allows for efficient servicing of the policy and affordability. However, in this situation, the policy is expensive and not affordable to the client. I have analyzed two payment options for this specific option to measure the affordability. It is indicated that the client will only manage to pay for a single policy of one million paying either annually or semi-annually. Any policy exceeding this amount will not be affordable and thus we consider this option as inappropriate for this matter.
Coverage
For the purposes of analysis on coverage, this section will consider the age of the client, gender, health issues, length of the policy term, activities engaged, death benefit and premiums paid. The age of the client is crucial as it will determine the necessary period of the cover. Life insurance policy is a product whose reliability forms a foundation from the period or number of years a client is to be covered. Time is a key element in determining policy characteristics such as the death benefit, premium payments, and the risks insured. Shorter period policies are considered as expensive. In this situation, the four options under consideration all have different time frames in which the policy will remain in force. As the name suggests, the twenty year term policy will cover the client for a period of twenty years. Also, the thirty year term policy is considered as short term policy and will cover the client for a period of thirty years. Whole life policy is a long term product and will cover the client for the rest of his life as long as the contract or the agreement remains in force. Finally, the custom made policy is same as the whole life policy covering the client’s life period as long as the agreement remains in force.
In terms of gender, the information gathered indicates that Bill is of male gender and the beneficiaries are both male and female. Gender also plays a key role in determining the price of these products in life insurance. It relies on the principle that the female gender tends to have a longer period of living as compared to their male counterparts. In accessing the gender, all the options cover the clients regardless of the gender. The data shows no discrimination in covering its customers on grounds of gender. Therefore, the gender of the client in this study will have minimal impacts on coverage.
On matters of health, the data indicates that the client is in good health condition. It also shows that he has been attending health check-ups and leads a healthy life style with regular exercises. The activities engaged on daily basis are safe and less risky in terms of exposure to injuries, diseases and death.
The following table shows an analysis of these factors under consideration in coverage. It helps to highlight the coverage required for a policy as these factors are considered. I have attached weights to each factor for better analysis. It also shows the impacts and necessity that it has on coverage.
Factor under coverage Key Gender Male Male -1
Female -2 1 Age 40years Young -1
Average -1.5
Old -2 1.5 Activities engaged Less risky Risky -2
Less risky-1 2 Health of individual Healthy Healthy -1
Unhealthy -2 1 Length of the policy Significant Long -1
Short -2 Death benefit Significant High -1
Low-2 1 Premiums paid Significant High -2
Low-1 1 Total 8.5 1.063 Figure SEQ Figure * ARABIC 22: factors under coverageFrom the table above, it shows the minimum requirement and specification for this criterion in which each option has to fulfill. The options score should not exceed this value. This accesses the validity and reliance on coverage in determining the best policy for thus specific situation.
The table below presents information on the significance in which each option places regarding the above factors under coverage.
Policy options Gender Age Activities engaged Health of individual Length of the policy Death benefit Premiums paid Total Score
Twenty year term policy 2 1 2 2 2 2 2 13 1.625
thirty year term policy 2 1.5 1 2 2 2 2 14.5 1.8125
Whole life policy 1 2 1 1 1 1 1 8 1
custom whole life policy 1 2 1 1 1 1 2 9 1.125
Figure SEQ Figure * ARABIC 23: options score of each factor under coverageBelow is a graph for the above interpretation and comparison of all the four options in determining the best insurance policy under coverage criterion.

Figure SEQ Figure * ARABIC 24: comparison of options under coverage criterionAs indicated in the table above, whole life policy is the only option that meets the requirements under coverage as per the client’s requirements. This option favors the factors of gender, age, activities engaged and health of individual. It also favors specific option features such as the time period of the option, premiums paid and the death benefit. Under whole life policy, it covers all the genders without discrimination of being male or female. Since it is a whole life policy, it will cover you for the longest period as compared to the rest of the options. Also, it coincides with the client’s health status as it favors those who are health and leading a healthy lifestyle. Again the client has been conducting regular exercises which also are favored by this option. Finally, whole life has a reasonable amount of death benefit.
Therefore these options can be ranked as follows under the criterion of coverage.
Whole life policy
Custom whole life policy
Thirty year term policy
Twenty year term policy
Custom whole life policy follows as the third ranked in terms of coverage. It has similar features and requirements as the whole life policy. The only difference in terms of coverage is in the factor of premiums paid. As indicated earlier, the premiums paid in this policy are too high.
Thirty year term policy is the third option in terms of coverage. One key factor in this policy is that it is a short term policy thus covering short period. The policy has low amount of the death benefit with high premiums required. This policy too considers the health of individual and risky activities that facilitate death within a short period. Finally, the last option in this criterion is the twenty year term policy. It has similar features as the thirty year term policy since they are all short term policies.
Cash or no cash value
According to the collected data, only two options provide cash value. The whole life insurance policy and custom made policy provides cash values. The short term policy does not provide cash value. Therefore, twenty year term policy and thirty year term policy does not have cash value. The cash value is designed to provide financial protection that has a savings feature. As indicated below, the options have been ranked according to the amount of cash value provided.
Whole life policy
Custom whole life policy
Twenty year term policy
Thirty year term policy
Whole life policy pays higher amounts as cash value followed by custom whole life. The short term policy does not pay any amount as cash value. Therefore, for cases of cash value, the client should consider the long-term policies. The inflows from these policies will be used for investment, and fro the up keep. The cash flows too can be used to secure loans.
CONCLUSION
The table below shows a comparison of all the options and criteria stating their ranking. The score in the criterion classified it from the best to the last. It also indicates the final score which is an average. The smallest average value indicates superiority in the best policy.
Twenty year term policy Thirty year term policy Whole life policy Custom whole life policy
Reliability 2 3 1 4
Affordable 3 2 1 4
Coverage 4 3 1 2
Cash or no cash value 4 3 1 2
Average score 3.25 2.75 1 3
Figure SEQ Figure * ARABIC 25: Final rankingThis study comes to a conclusion that whole life insurance policy is the best policy to choose, and that would be used to provide financial security in case of misfortunes. It had the highest scores in all the criteria used in this study. In was the best regarding reliability, affordability, coverage, and the cash value elements.
The second option to be considered for life insurance purposes is the thirty-year term policy. This policy was quite affordable regarding premiums paid. It had moderately good scores in all the criteria.
The client will also consider custom whole life policy as the third option in this research study. The policy provided moderately high scores regarding coverage and cash value offered by this product.
Lastly, the last option is the twenty-year term policy. Despite the fact that the policy has a good score regarding reliability, it was expensive hence not affordable, covered the client poorly and had no cash value accumulation.
Each option has presented forms of superiority in each criterion and presented difficulties in determination of the best policy that would provide financial protection following the occurrence of risks.
RECOMMENDATION
Finally, I would recommend that you to consider purchasing the whole life policy as indicated in this research study. Buying a lifetime policy is beneficial factoring in the many risks inherent in our today’s activities. Also, in this research study, I have factored in the insurance companies that provide these services critically highlighting the key elements for your easier and better decision.
I would also suggest that you conduct the company of choice to determine the exact amount of premiums charged, transactional fee and interest rate. This is important since such information is highly volatile and changes anytime. You will also be able to forecast future changes in the prices charged. Finally, you would be in a better position if you conducted further research and practically indulged in these policies.

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