It’s always a good idea to conduct an annual review of your life insurance policies. Getting the big picture every 12 months or so helps you know if you are on track or need to make adjustments in either your goals or how you plan to reach them.
In the coming weeks, many New York Life clients will be getting a phone call from their agents to set aside a time to discuss their policies, as well as any additional needs they may have.
The reasons to review and discuss your coverage are numerous. Some of them include:
• Finances are dynamic
• Needs and goals change
• Family incomes may change, as well as jobs
• Children are born, or others go off to college
• Estate planning changes
The Term Solution
If you’re a policyholder, you may want to consider purchasing additional coverage, depending on your current needs. Remember, Term insurance is designed to help people purchase the protection they need when they only need coverage for a specific period of time. Term life insurance has a guaranteed death benefit but no cash value and the premiums will increase at pre-determined intervals such as 1 year, 5 years, 10 years and 20 years.
It is also very often the product of choice when protection needs may be high for a period of time, then drop back, such as when your family is growing. Term insurance can also be an effective way to supplement permanent insurance during high-need years, such as when family and other financial responsibilities are outpacing income.
In these situations, term coverage allows you to obtain crucial death benefit protection without breaking your budget. Also, if the coverage is convertible (the coverage can be "converted" to a comparable cash value policy, without the need to provide evidence of insurability), you can get the coverage you need today — with the ability to obtain permanent coverage in the future. In this respect, term insurance meets a valuable need.
The Living Benefits of Whole Life
If you have a Term life insurance policy, you may want to discuss your conversion options with your agent. As a Term policyholder, you may be able to convert all or some of your policy to Whole life — giving you the ability to access the “living benefits” of Whole Life should the need arise and the security of knowing that your loved ones’ futures will be secure. All backed by nearly 166 years of financial strength .
Best described as benefits available to you while you are still alive, living benefits can help you pay for life’s anticipated, and perhaps unanticipated, events, such as buying your first home, education expenses or a wedding. Funds are accessed by tapping into the cash value accumulated within your Whole Life policy, which builds over time as you pay your premiums.
Consider this scenario: Dan and Janet Quan have three children, two in college, and one a senior in high school. The Quans aren’t getting as much financial aid as they had hoped, and with a third child about to enter college, things are about to get tight. But education is important to them, and they want their children to be able to fulfill their dreams. After weighing their options, they decide to access some of the cash value within their Whole Life policies, which Dan’s parents purchased for them as a wedding gift almost 25 years ago. The monies go to help pay for their children’s tuition, and they can breathe a little easier.
Converting Term: Building Your Financial House One Brick at a Time
“Term conversions can be a way of helping clients realize the dream of having a permanent policy that builds cash value,” says one New York Life Agent, who equates Term conversions to building a house, but with “one brick at a time.” Converting Term slowly, for many of his middle-income clients, allows them to build cash value over time.
“When I write a Term policy, I like to illustrate conversion by using a rent-to-own situation. Let’s say you rent your apartment today, and you’d like to buy it outright. But it’s hard to come up with the entire amount all at once,” the agent explains. “Instead, we’re going to do the next best thing: we’re going to sell you the house, and you’ll pay for it a little over time starting today. Every year, we’re going to convert a little piece — maybe not even to build cash value, but to be sure the cost of insurance doesn’t go up.”
“This way, I make sure a client’s immediate needs are met, and eventually, over time, all of those little bricks will make a house,” he says.
For more information on policy reviews, converting your Term coverage, or the living benefits of Whole life, speak with your New York Life agent — and remember, you don’t have to wait for them to call you!
And, if you’re not a New York Life policyholder, please fill out the quick form at the top of the page. We’ll have an agent in your local area contact you at your convenience.
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