Modified Premium Whole Life Insurance At-a-Glance

Modified Premium Whole Life Insurance At-A-Glance

What Is It?
Modified Premium Whole life is permanent insurance that protects you for your whole life, from the day you purchase the policy until you die, as long as you pay the premiums. It is a form of permanent insurance that accumulates cash value and is eligible to receive dividends.

Modified Premium Whole Life differs from Whole Life in that it features a lower initial premium that remains level for the policy's first five years. The premium increases in year six and remains at that level for as long as you own the policy.

Modified Premium Whole Life can be a solid foundation upon which to build a long-term financial plan because it guarantees lifetime protection for your family or business. It's well suited for individuals who want a large amount of insurance protection with a moderate amount of cash value accumulation in order to keep premiums lower in the first five years.

What can Modified Premium Whole Life do for you?
Modified Premium Whole Life insurance provides basic insurance protection, plus...

  • Mortgage protection: Benefits can be used to help pay off mortgages and other outstanding debts in the event of a premature death.
  • Estate planning: Modified Premium 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: Cash values can be accessed through policy loans or surrenders to supplement a retirement income. Policy loans will reduce the death benefit.
  • Charitable giving: You can bequest life insurance proceeds to a favorite charity. In this way, a Modified Premium Whole Life policy can enable you to make a significant donation to your favorite charity upon your death.
  • Education funding: Policy loans or insurance benefits from Modified Premium Whole life insurance can help pay for a child's education in the event of your death.
  • Business needs: Modified Premium Whole Life insurance can play a variety of roles in the smooth operation of a business. It may be used as an attractive executive and employee benefit program, and a means of safeguarding a business's financial future.

    A business can have a buy/sell agreement that is funded through the life insurance policy. Proceeds from a buy/sell agreement may help a company continue to operate if one of its principals dies prematurely.

    Other potential business uses of a Modified Premium Whole Life policy include:

  • Split dollar arrangement
  • Executive bonus
  • Group equity carve-out
  • Deferred compensation
  • Salary continuation

    How does it work?

  • A life insurance agent helps you determine an amount of insurance needed to adequately protect your family or business in the event of your death. (You may also use New York Life's Survivor Needs Calculator to learn more on your own.)
  • Generally after the first year, the policy begins to accumulate cash value. Cash value accumulation is lower in the first five policy years. The amount of cash value in your policy usually increases every year. Cash values build on a tax-deferred basis. This cash value accumulation can be accessed via policy loans and/or withdrawals and used to help purchase a home, fund a child's education, supplement retirement income, or for any other purpose. You may also choose to leave it in the policy and allow it to grow. Loans and/or withdrawals will reduce the death benefit.
  • A Modified Premium Whole Life policy is eligible to earn dividends. Dividends are determined by the company's board of directors each year and are not guaranteed. When a dividend is payable, you may choose to take it in cash or use it to purchase more insurance or to pay or reduce your premiums. The dividend a policy earns fluctuates from year to year and is not guaranteed.
  • When you die, the company pays your beneficiaries the death benefit, usually the face amount of the policy. This money is generally received by the beneficiaries free from federal income tax.

    Modified Premium Whole Life insurance means...

  • Permanent protection that can never be canceled as long as you pay your premiums.
  • Premiums that are lower in the first five years.
  • Beginning in year six, a level premium that is guaranteed never to increase.
  • A guaranteed death benefit, generally free from federal income tax.
  • Tax-deferred cash value accumulation.
  • The potential to earn dividends. (Dividends are not guaranteed.)

    Click here to get the full product details about Modified Premium Whole Life insurance.

    View more information about Family Protection Insurance. (  157KB)

    *This product is not available in all states. Please contact a local New York Life agent for more information.

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