Find the Right Type of Policy
Once you've got an estimate of how much insurance you'll need, it's time to think about the type of policy that best fits your needs. Today life insurance comes in many varieties, but there are four basic types term, whole life, universal life, and variable life. As a first-time buyer, one will more than likely fit your needs.
Term Life Insurance
As its name implies, term insurance provides life insurance protection for a specific period of years. Benefits can be used to help pay off mortgages and other outstanding debts in the event of a premature death. Generally the least expensive form of life insurance, term provides pure insurance protection only. It does not accumulate cash value, and generally does not receive dividends.
As its name implies, term insurance provides life insurance protection for a specific period of years. Benefits can be used to help pay off mortgages and other outstanding debts in the event of a premature death. Generally the least expensive form of life insurance, term provides pure insurance protection only. It does not accumulate cash value, and generally does not receive dividends.
Term may be an ideal choice when you need life insurance coverage for a well-defined period of time. It can be used to protect needs that last for a predictable period, such as a student loan or mortgage. People in their 20s and 30s often purchase a term policy and later convert it to a permanent plan (see Whole Life, below). The conversion privilege in their term policies guarantees their insurability at a later date-even if they become uninsurable.
New York Life Insurance Company makes a variety of term policies available, including five-, ten-, and 20-year policies.
Whole Life
In contrast to term insurance, whole life, also known as permanent insurance, protects you throughout your lifetime, from the day you purchase the policy until you die, as long as you pay the premiums. Another difference between the two is that permanent insurance builds cash value. Through policy loans, you can access the cash values and use them for a host of purposes such as education funding and supplemental retirement income. However, policy loans against the cash value accrue interest and reduce the death benefit and the cash value by the amount of the outstanding loan plus interest. Guaranteed for life, your policy will be renewed every year, regardless of your health for as long as you live, again, as long as required premiums are paid.
In contrast to term insurance, whole life, also known as permanent insurance, protects you throughout your lifetime, from the day you purchase the policy until you die, as long as you pay the premiums. Another difference between the two is that permanent insurance builds cash value. Through policy loans, you can access the cash values and use them for a host of purposes such as education funding and supplemental retirement income. However, policy loans against the cash value accrue interest and reduce the death benefit and the cash value by the amount of the outstanding loan plus interest. Guaranteed for life, your policy will be renewed every year, regardless of your health for as long as you live, again, as long as required premiums are paid.
Permanent policies are also eligible to receive dividends, a portion of the company's surplus that is distributed to the owners of participating policies. (Dividends can be taken in cash, used to reduce the premium, left to accumulate at interest, or used to purchase paid-up additional insurance. Dividends are not guaranteed.) Whole life can provide a permanent solution to several financial concerns including:
- Mortgage protection: Benefits can be used to help pay off mortgages and other outstanding debts in the event of a premature death.
- Estate preservation: Whole life insurance can provide funds to cover estate expenses and help avoid the need to sell assets and or borrow money to cover these expenses.
- Retirement funding: If the need for death benefit protection has decreased, cash values can be accessed through policy loans or surrenders to supplement a retirement income. Loans will reduce the death benefit.
- Charitable giving: A whole life insurance policy can enable you to make a significant donation to your favorite charity upon your death.
- Business needs: Whole life can be an attractive executive and employee benefit and a means to assure a business's financial future.
New York Life Insurance Company offers many permanent life insurance policies, including Modified Premium Whole Life, and Survivorship Whole Life.
Universal Life
Universal life also provides permanent life insurance protection and access to cash values that grow tax-deferred. Universal Life differs from whole life in its flexibility that enables you to choose the amount of protection that best suits your family or business. With Universal Life, you can increase or decrease your coverage, as your insurance needs change and control the amount and frequency of premium payments. The policy can also be customized with various riders to fit your lifestyle. Universal Life policies are issued by New York Life Insurance and Annuity Corporation. (NYLIAC)(a Delaware Corporation), a wholly-owned subsidiary of New York Life Insurance Company.
Universal life also provides permanent life insurance protection and access to cash values that grow tax-deferred. Universal Life differs from whole life in its flexibility that enables you to choose the amount of protection that best suits your family or business. With Universal Life, you can increase or decrease your coverage, as your insurance needs change and control the amount and frequency of premium payments. The policy can also be customized with various riders to fit your lifestyle. Universal Life policies are issued by New York Life Insurance and Annuity Corporation. (NYLIAC)(a Delaware Corporation), a wholly-owned subsidiary of New York Life Insurance Company.
Variable Universal Life*
Variable Universal Life insurance is a type of flexible premium, permanent life insurance policy that allows the policy owners to have premium dollars allocated to a variety of investment options, including a fixed account backed by the assets in the general account of NYLIAC. Variable Universal Life Insurance generally provides a federal income tax-free death benefit, and is accessible through policy loans and/or withdrawals. Note, all guarantees, including death benefit payments are dependent on the claims-paying ability of NYLIAC and do not apply to the investment performance or the safety of the underlying Investment Divisions on the variable universal life policies. Also, loans against the cash value and withdrawals may reduce death benefit and the cash value. If the policy is designated as a Modified Endowment Contract, withdrawals taken prior to age 59 1/2 may be subject to a 10% IRS penalty tax and surrender changes may apply. Additional taxes may apply to policies designated as a modified endowment. The product prospectus contains more information.
Variable Universal Life insurance is a type of flexible premium, permanent life insurance policy that allows the policy owners to have premium dollars allocated to a variety of investment options, including a fixed account backed by the assets in the general account of NYLIAC. Variable Universal Life Insurance generally provides a federal income tax-free death benefit, and is accessible through policy loans and/or withdrawals. Note, all guarantees, including death benefit payments are dependent on the claims-paying ability of NYLIAC and do not apply to the investment performance or the safety of the underlying Investment Divisions on the variable universal life policies. Also, loans against the cash value and withdrawals may reduce death benefit and the cash value. If the policy is designated as a Modified Endowment Contract, withdrawals taken prior to age 59 1/2 may be subject to a 10% IRS penalty tax and surrender changes may apply. Additional taxes may apply to policies designated as a modified endowment. The product prospectus contains more information.
There are risks associated with investing in variable universal life insurance policies. Please be aware that assets allocated to the Investment Divisions are subject to market risks and will fluctuate in value. Please be aware there are fees and charges associated with these policies. Variable universal life insurance policies are sold by prospectus only through properly licensed Registered Representatives. To obtain a copy of the product and fund prospectuses for a VUL policy that may be right for you, please contact your NYLIFE Securities LLC Registered Representative or call 1-800-598-2019. Investors are asked to consider the investment objectives, risks, charges and expenses of the investment carefully before investing. Both the product and the underlying fund prospectuses contain this and other information about the product and underlying investment options. Please read the
prospectuses carefully before investing.
