Survivor Purchase Option (SPO) Rider

Benefits of Using the SPO Rider
Do you anticipate that down the road you may need life insurance to fund an estate conservation strategy or business continuation plan? Will your spouse, child, or business partner need greater life insurance protection someday? The Survivor Purchase Option (SPO) rider is a useful tool that may be the flexible solution you are looking for.

You can purchase an SPO rider with a New York Life Whole Life or Modified Premium Whole Life policy. At your death, your policy beneficiary will have the right to purchase a new policy on a "designated insured" you've selected — without that designated insured providing additional proof of good health. SPO gives the policy beneficiary the option to "wait and see" and decide whether or not he or she would like to purchase additional insurance coverage on the designated insured within 90 days of your death. It enables your beneficiary to cover expenses at your death, and provides the option to obtain additional insurance coverage for someone who may need it for the future.

The SPO rider:

• Gives the beneficiary the ability to purchase life insurance coverage on the designated insured down the road, regardless of his or her health at that time;
• Can enable the beneficiary to receive proceeds at your death to cover expenses, and provides a second opportunity to re-examine life insurance needs;
• Allows the beneficiary to "wait and see" whether or not he or she will need life insurance for an estate conservation strategy;
• Can be used by those who know they'll need a large amount of coverage in the future, but currently have limited funds — "pay less now to buy more later;" and
• Can help protect a business by funding buy-sell agreements and providing key person insurance.

SPO for Estate Conservation
If you are unsure whether or not your heirs will have to pay estate taxes on your estate, the SPO rider can help you protect your heirs if these taxes come due.

For example, current federal tax law provides for an "unlimited marital deduction" for those assets passing to a surviving U.S. citizen spouse. However, when the surviving spouse dies, and the estate is passed on to heirs (quite often his or her children), those heirs will have to pay any estate taxes due. Estate taxes often force heirs to sell large, non-liquid assets, such as a home or family business.

By using an SPO rider, you could make your spouse the policy beneficiary and your designated insured. If you were to die first, he or she would receive the full death benefit, with the option to use all or a portion of it to purchase a policy on himself or herself, regardless of current health.

At his or her death, your heirs would receive your joint estate, as well as the proceeds from your spouse's option policy. Your heirs could use the proceeds from the option policy to pay any estate taxes and other expenses, and leave large assets, such as homes and businesses, intact.

Estate conservation is complicated. Be sure to seek advice from your legal, financial, and tax advisors when setting up your estate conservation strategy.

How It Works
When the Whole Life/MPWL Policy Is Purchased
When you purchase a New York Life Whole Life or Modified Premium Whole Life policy with an SPO rider, you'll select the following:

• The Policy Beneficiary: The beneficiary(ies) is/are the individual(s) that you want to receive the proceeds from your policy. On a policy with the SPO rider, it is the beneficiary who will have the option to purchase the new policy on the life of the designated insured. (Requirements for an insurable interest must be satisfied.)
• The Designated Insured: The designated insured is an individual who you believe may need life insurance protection at your death. It may be your spouse, child, or business partner, and could even be the same person selected as your policy beneficiary. The designated insured is underwritten at the time of issue of the original policy and must be rated Standard, Nonsmoker, or Preferred.
• The Option Amount: The option amount is the face amount your beneficiary may purchase on the life of the designated insured and is chosen at the time of issue of the base policy. It can be a multiple between one and five times the face amount of your policy.

At Your Death
When you die, the beneficiary has 90 days to decide whether or not to purchase a policy, for an amount up to the selected option amount, on the life of the designated insured without additional underwriting requirements.

At the time of purchase of the option policy, the beneficiary must still have an "insurable interest" in the life of the designated insured to purchase a policy on his or her life. While this phrase is not subject to a precise definition, "insurable interest" means that the beneficiary must have some relationship to the designated insured whereby he or she can reasonably expect to benefit from the person's continued life or suffer financial loss upon his or her death. For example, the beneficiary could be the parent of the designated insured, or he or she may have a business relationship to the designated insured. Likewise, the beneficiary and the designated insured could be the same person.

If at the time of your death the beneficiary no longer has an insurable interest in the life of the designated insured, the designated insured can purchase the option policy himself or herself.

If the SPO rider option is exercised, the beneficiary will use the proceeds from your policy to purchase a policy on the life of the designated insured. If the beneficiary does not elect to exercise the SPO rider, he or she will receive the policy proceeds.

The Option Policy
The option policy must be a New York Life Whole Life or Modified Premium Whole Life policy. It will have the same policy date as your original policy, and the premium will be based on the age and underwriting class of the designated insured at the time the original policy was issued. The new policy application and the initial premium must be received before the end of the 90- day option period, and while the designated insured is living.

Riders and other benefits are not included on the new policy. However, the option policy is eligible to receive dividends* from the date it is issued.

*Dividends are based on the policy's applicable dividend scale, which is neither guaranteed nor an estimate of future performance.

SPO's Safety Net: Providing Additional Proceeds at a Difficult Time
SPO also features a safety net known as the "Common Disaster Clause." If the designated insured dies at the same time as you (or within 90 days after your death, and before the new life insurance policy is purchased), the Company will assume that the SPO rider would have been exercised. We will pay the proceeds under the original policy to the beneficiary plus the maximum amount of life insurance coverage that would have been available under the option policy (less the option policy's initial premium) to the designated insured's estate. And, if both you and the designated insured have policies with the SPO rider, the option policy will be issued for the designated insureds under both policies — providing beneficiaries with the proceeds they need at a difficult time.

Your New York Life Agent
A New York Life agent can provide additional information on how the Survivor's Purchase Option rider can help you and those close to you. Your agent can also provide you with information about other riders and products available from New York Life and its affiliated companies. Contact a local New York Life agent today, and find out why we are The Company You Keep.

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