Buying life insurance helps address your family’s financial security if you pass away. It can help cover expenses like debt, living costs, college tuition, medical bills, and final expenses.
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Life Insurance 101 Everything you need to know about life insurance.
There's a lot of information out there about life insurance, but you don't need to understand all of it to get started. The basic premise is simple: Life insurance gives you peace of mind while you're alive, and financial support for your loved ones when you're gone. It's something you should have if there are people in your life depending on you for everyday living expenses, college tuition, or retirement income.
Life insurance can make a huge difference for you and your family, not just financially but emotionally, too. And purchasing a policy sooner, rather than later, will give you more options and flexibility, and improve your future financial security.
Your life insurance questions answered.
Do I need life insurance?
If you have someone depending on you for financial support, then you should consider it.
How does life insurance work?
Life insurance is an agreement between you and your insurance company. You make regular payments, called premiums, and the insurance company pays your beneficiaries a generally tax-free lump sum when you pass away.
With some policies, you get additional benefits to use during your lifetime, like accessing the policy's cash value, which can be used to help pay college tuition or for a down payment on a home. However, accessing the cash value will reduce the policy's available cash surrender value and death benefit. If you have a terminal illness, you can also accelerate the death benefit and use it for healthcare needs.
Which type of insurance is best?
There are several different types of policies, but there are two basic broad categories of life insurance: term life and whole life. The best choice for you depends on your needs. It may even be a combination of products.
Term life insurance provides a death benefit for a set period, typically between 10 and 20 years. This is straightforward insurance, and it's what most people start out with. Certain term life policies can be converted to long-term policies at a future point. This is a useful benefit if your life changes and you need a different type of protection.
Whole, universal, and variable universal life insurance all provide protection for the long term. These policies contain a cash value.
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How much does it cost?
The cost of life insurance is based on several factors: your age, gender, health, lifestyle, and occupation. A financial professional can help you find a solution that fits your needs.
Life insurance terms to know.
Cash Value
The amount of money in a whole life policy that accumulates as you pay premiums. You can access it via loans or partial withdrawals for a variety of financial needs, like unexpected expenses or to pay for your child's college tuition. This money grows tax deferred. Loans accrue Interest.
Convertibility
A benefit provided by some carriers that allows you to convert from a temporary term life policy to a whole life policy if your life changes, without going through additional medical exams.
Dividend
A share of the company's divisible surplus that is paid to an eligible policyholder. A divisible surplus is the extra money a mutual company has after paying claims, paying expenses, and setting aside reserves for future claims and benefits. Dividends can help your cash value and coverage grow. They are not guaranteed, but New York Life has paid them every year since 1854.
Beneficiary
The person or entity that receives the benefit amount upon the death of the insured.
Rider
An add-on, generally available for purchase, that you can choose to incorporate into your policy to further customize coverage.
Life insurance FAQ’s
One of the primary reasons people get life insurance is for the peace of mind that comes with making sure their loved ones will be taken care of if anything happens to them.
In general, you should figure out how much life insurance you need by calculating your long-term financial obligations and then subtracting your assets. The remainder is the gap that life insurance will have to fill. A financial professional can help you with a more thorough protection needs analysis.
Learn more about life insurance from New York Life
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