Life Insurance

“Life Insurance is essential for your family – don’t die without it”

Remember: You Only Live Once!

LIFE INSURANCE FACTS

Life insurance can be a powerful tool for providing financial security, and many stories illustrate its impact on families. Here are a few themes and examples:

Unexpected Tragedy: A young father with two children unexpectedly passes away in an accident. His family had only just purchased a life insurance policy, which provided the necessary funds for his spouse to cover expenses, pay off the mortgage, and ensure the children could continue their education.

Long-Term Planning: A couple in their 50s invests in a whole life insurance policy, thinking of it as a safety net. When one partner is diagnosed with a terminal illness, the policy allows them to access funds early, easing the financial burden and allowing them to spend meaningful time together without worrying about bills.

Business Continuity: A small business owner takes out a life insurance policy as part of a buy-sell agreement with a partner. When the owner suddenly passes away, the insurance payout enables the partner to buy out the deceased owner’s share, ensuring the business continues to operate smoothly.

Legacy and Charity: An individual passionate about a cause purchases a life insurance policy with the intention of leaving a legacy. Upon their passing, the policy’s death benefit is directed to their favorite charity, significantly impacting the organization and honoring their wishes.

Peace of Mind: A single parent with a limited income decides to invest in a term life insurance policy. Years later, they feel immense relief knowing that if anything were to happen to them, their children would be financially secure and cared for.

These stories highlight how life insurance can provide financial support, peace of mind, and a way to honor loved ones. Do you have a specific aspect or type of story in mind?

Life Insurance in a nutshell

Life insurance is a financial product that provides a payout, known as a death benefit, to beneficiaries upon the policyholder’s death. It serves as a safety net for loved ones, helping to cover financial obligations and provide support in the event of the policyholder’s passing. Here’s an overview of life insurance:

Key Features of Life Insurance

Types of Life Insurance:

Term Life Insurance: Provides coverage for a specific period (e.g., 10, 20, or 30 years). If the policyholder dies during the term, beneficiaries receive the death benefit. It’s typically more affordable but does not build cash value.
Whole Life Insurance: A type of permanent life insurance that provides coverage for the policyholder’s entire life, as long as premiums are paid. It includes a savings component that builds cash value over time, which can be borrowed against or withdrawn. Another concept using Whole Life Insurance is called, “The Infinite Banking Concepts”. The Infinite Banking Concept (IBC) is a financial strategy that uses whole life insurance policies as a means to build wealth and create a personal banking system. Developed by R. Nelson Nash, IBC focuses on leveraging the cash value of a life insurance policy to finance personal expenses and investments, effectively allowing individuals to become their own bankers. Call for a unique strategy that may fit your goals.
Universal Life Insurance: Another form of permanent insurance that offers flexibility in premium payments and death benefits. It also accumulates cash value, which earns interest.
Variable Life Insurance: A permanent policy where the cash value and death benefit can fluctuate based on investment performance. Policyholders can choose how their cash value is invested in various options.

Premiums:

Premiums are the payments made to keep the policy active. They can be paid monthly, quarterly, or annually. The cost of premiums varies based on factors such as age, health, type of policy, and coverage amount.

Death Benefit:

The death benefit is the amount paid to beneficiaries upon the policyholder’s death. This amount is generally tax-free for the beneficiaries and can be used to cover expenses like mortgage payments, education costs, and living expenses.

Cash Value:

For permanent life insurance policies (like whole and universal life), a portion of the premium contributes to a cash value account, which grows over time. Policyholders can borrow against this cash value or withdraw it, though this can affect the death benefit.

Beneficiaries:

Policyholders can name one or more beneficiaries to receive the death benefit. Beneficiaries can be family members, friends, or even organizations.

Underwriting Process:

To obtain life insurance, applicants usually go through an underwriting process, which assesses their health, lifestyle, and risk factors to determine premium rates. This may include a medical exam or health questionnaire.

Exclusions:

Life insurance policies may have exclusions, such as death due to suicide within a certain period, participation in high-risk activities, or certain pre-existing conditions. It’s important to review the policy terms carefully.

Choosing Life Insurance

When selecting a life insurance policy, consider:

Coverage Needs: Assess how much coverage is necessary to protect your loved ones and cover debts and expenses.
Policy Type: Determine whether you want term or permanent life insurance based on your financial goals and budget.
Premium Affordability: Ensure that the premium fits within your budget and consider how it may change over time.
Insurer Reputation: Research insurance companies for their financial stability and customer service track record.

Conclusion

Life insurance is an important financial tool that provides peace of mind and financial security for your loved ones in the event of your passing. By understanding the types of life insurance, their features, and the factors that influence your choice, you can make informed decisions that align with your financial goals and family needs. Consulting with a financial advisor or insurance agent can also help you navigate your options effectively.

At YOLO, we have all types of Life Insurance that hit the ‘bulls-eye’ based on age, goals, health, and life situations.

Why get life insurance?

Life insurance can give you lasting peace of mind in terms of the assurance that you have provided a legacy. That’s because the right coverage can offer a valuable combination of benefits, many guaranteed by the claims-paying ability of New York Life—so that you and your loved ones know exactly what you’re getting.³ Of course, you have to make a long-term commitment to paying premiums and keeping the policy in force. Some of the most common reasons for buying life insurance include:

1. Guaranteed protection
If you have a family, a business, or others who depend on you, the life insurance benefit of a whole life policy acts as a financial safety net. When you die, your beneficiaries will receive a lump-sum payment that is guaranteed to be paid in full (provided all premiums are paid and there are no outstanding loans). It’s essential protection that you can count on to be there for your loved ones when needed.

2. Income replacement
Imagine what would happen to your family if the income you provide suddenly disappeared. With whole life insurance, you can help make sure that your loved ones have the money they need to help:

Pay the mortgage
Afford childcare, health care, or other services
Cover tuition or other college expenses
Eliminate household debt
Preserve a family business

3. Tax-free benefit
Your beneficiaries will be able to enjoy every penny you leave them. That’s because the benefit of a life insurance policy is generally passed along federal income tax free.

4. Guaranteed cash value growth
As you pay your premiums, your Whole Life policy builds cash value that is guaranteed to grow—tax deferred—and can help meet a variety of financial goals:

Supplement retirement income
Fund a child or grandchild’s education
Pay off a mortgage
Protect existing assets
Establish an emergency fund

5. Dividend potential
One of the benefits of purchasing whole life insurance from New York Life is that you will be eligible to receive dividends.⁴ Although they are not guaranteed, when dividends are awarded, you can take them in cash, use them to offset your premiums, or use them to buy paid-up additional insurance that increases your coverage and cash value, use them to offset your premiums, or take them in cash.

6. Optional riders
There are several ways to tailor a whole life policy to meet your individual needs. For an additional cost, you can use riders to purchase additional protection without further underwriting, to pay your premiums if you become disabled, to use some of your face amount to pay for chronic illnesses, or to purchase coverage for your children. Your agent can help you decide if any of these riders are right for you.

Life Insurance at Various Life Stages | First National Bank