Living the "American Dream" has been a goal for generations. The loving family, the beautiful home... this is the stuff dreams are made of. But protecting your dreams and caring for loved ones goes back a lot further than the "American Dream" — those intentions are probably as old as mankind itself.
Providing for your family's financial well–being means putting together a comprehensive program that will take care of today's needs, as well as plan for tomorrow. Your strategy might include a mix of bank accounts, health insurance, life insurance, annuities, mutual funds, and an IRA. When considering the need for life insurance, it's wise to take a close look at the advantages of permanent life insurance. This type of policy not only offers financial protection to survivors, but can also benefit a family during the insured's lifetime.
Why Permanent Life
Insurance is Unique
Permanent life insurance offers protection that will last your entire life (provided premiums are paid) rather than for a temporary period of time. In addition to the lifelong protection offered by permanent life insurance, there are also living benefits that can help you during your lifetime.
How Permanent Life Insurance
To many, the primary reason for having life insurance is to protect their family's financial future. Should the insured die, life insurance can help pay off mortgages, fund college educations, take care of final expenses, offset the loss of the insured's income and allow a family to continue its standard of living. In most cases, insurance proceeds pass to beneficiaries free of probate costs, legal fees, local inheritance tax, and federal income tax. To the extent permitted by state law, insurance benefits are protected from claims of the insured's creditors.
Benefits can be paid promptly to beneficiaries through a convenient, interest earning, no–fee checking account. Or if the beneficiary prefers, they can designate a payment method in advance, choosing from a variety of settlement options that offer periodic payments.
Not only does permanent life insurance offer a guaranteed payment to beneficiaries at the death of the insured, but it also provides important benefits during the insured's lifetime.
Benefits of Permanent
Life Insurance During
Unlike term life insurance, permanent life insurance builds cash value. The cash value builds, tax–deferred, over the years, and you can put it to work for you in a number of ways when death benefit needs decrease.
Accumulation of Cash Value
A permanent life insurance policy builds guaranteed cash value as you pay your premiums when due. On a Whole Life policy, you can also utilize any dividends1 that are credited to your policy to purchase additional coverage. These values are further enhanced since cash value accumulates tax–deferred. If needed, cash value can be accessed through a valuable loan2 provision.
Tapping into Your Cash Values2
You can borrow from your policy's accumulated cash value by taking a loan at competitive interest rates. You can use these funds any way you wish — make a down payment on a home, finance a new car, or even start a business (the J.C. Penney and Disney empires were started with help from loans from life insurance policies). The loan privilege is a valuable feature of permanent life insurance, but keep in mind that borrowing against your policy's cash value reduces your death benefit protection. In addition, any time you take money out of an insurance policy, you may be subject to state and federal taxes. It may be advisable to borrow only with the intention of repaying your loan in full. Insurance companies offer several convenient repayment methods to restore your policy's full value.
The Flexibility of
Permanent Life Insurance
As needs change, a permanent policy can be modified to reflect those changes. Most insurance companies make a wide range of optional benefits and riders available that you may add to your policy to enhance your existing coverage, extend coverage to family members, and help out in difficult times. Additional underwriting may be required to add benefits or riders.
Some of the ways in which you can use riders to customize your policy include the following:
Enhancing your Coverage
You can increase your protection by purchasing a Term Insurance rider for your policy. An Accidental Death Benefit provision can also be purchased, which doubles the insurance face amount (generally up to $300,000) if the insured dies as a result of an accident.
Extending Coverage to
You may purchase a Children's Insurance rider to protect loved ones with term insurance. With a Children's Insurance rider, your children will be covered by term insurance, and are guaranteed the right to purchase permanent life insurance, in specified amounts when they reach age 25.3
Help in Difficult Times
By purchasing a Waiver of Premium rider or a Monthly Deduction Waiver rider, premiums are paid by the company during a period of disability, as defined in the rider. New York Life also offers a Living Benefits rider, which pays a benefit should the insured become terminally ill.
Build Your House
on a Sound Foundation
When evaluating your family's financial needs, it's important not to overlook life insurance. A permanent life insurance policy is a unique, flexible financial product that can help provide peace of mind, as well as help you meet important needs during your lifetime. It can be the sound foundation upon which you build your financial house. A life insurance policy can be used as collateral for a loan or mortgage. It can also help establish a good credit rating. In addition, accumulated cash values can be borrowed2 to make a down payment on that dream home.
1Dividends are not guaranteed.
2Policy loans accrue interest at the current variable loan interest rate and reduce the total cash value and total death benefit by the amount of the outstanding loan and accrued loan interest.
3Or, if earlier, the policy anniversary when the policy's insured is or would have been 65.
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Consult an Agent:
At no charge to you, a New York Life Agent — professionally trained and experienced — can help you analyze your needs and recommend appropriate solutions through insurance and financial products and concepts. Request a no-obligation review with a New York Life Agent.
New York Life Insurance and Annuity Company does not provide tax, legal or accounting advice. Please consult your own tax, legal or accounting professional before making any decisions.
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