Reasons to buy insurance are different for everyone. But the decision to purchase insurance is, at its core, all about providing financial security for yourself and the ones you care about. Learn why life insurance is important, and who needs it.
Why is life insurance important?
Buyinglife insuranceprotects your spouse and children from the potentially devastating financial losses that could result if something happened to you. It provides financial security, helps to pay off debts, helps to pay living expenses, and helps to pay any medical or final expenses.
Life insurance provides cash when you need it most.
Your life insurance policy can deliver a specified sum of money when you need it. Upon your death, your family will receive your policy payout immediately. And that death benefit is generally not subject to federal income taxes. For example, a $500,000 policy provides $500,000 in death benefit proceeds directly to your beneficiary.
Steps in the insurance buying process:
- Determine your goals, determine how much insurance you need to meet your goals over time, and determine what you can afford to pay.
- Learn what types of insurance can help you meet your needs.
- After considering initial premium payments, any possible increases in premiums over time, any additional death benefits,1and any living benefits2that can be utilized before you die, choose the type of insurance policy (or combination of types) that best meets your needs.
Remember, working with a financial professional can help make this whole process easier. A financial professional can help explain the differences between types of policies, help you calculate the amount you need, and present potential options that may best suit your needs.
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.3Of 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.4Although 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.
1The life insurance death benefit is the amount that is paid when the policy is in effect and the insured dies. The insured is the person whose life is covered under the policy. Accessing the cash value of a Whole Life policy for special expenditures will reduce the available cash surrender value and the death benefit.
2A living benefit is any benefit the policy owner can access while the insured is still living. Not all life insurance policies are designed to offer living benefits.
3All guarantees are based on the claims-paying ability of the issuer
4While dividends are not guaranteed, eligible policy owners have received them for more than 160 years. Some policies are participating but are not expected to receive dividends.
Oregon Policy Form Numbers for New York Life Whole Life:New York Life Insurance Company is the issuer of New York Life Whole Life. In Oregon, the Whole Life policy form number is ICC18217-50P (4/18). SMRU # 1891275
FAQs
Since life insurance is money, your loved ones can use after you are gone to help pay for things like the mortgage, college tuition/child care, and everyday expenses like food and utility bills, you'll want to make sure there aren't any gaps in your Plan's coverage amount… and what they'll need when the time comes.
Why do you want to get life insurance? ›
Life insurance provides cash when you need it most.
Your life insurance policy can deliver a specified sum of money when you need it. Upon your death, your family will receive your policy payout immediately. And that death benefit is generally not subject to federal income taxes.
How to answer life insurance questions? ›
Medical history: Your life insurance application will ask about significant medical conditions you have or have experienced including chronic illnesses, past surgeries or other major medical treatments. Be as specific and detailed as possible about each situation, its duration and your ongoing or past treatment.
Do you think that you need life insurance why or why not? ›
Those without life insurance may pass away with financial obligations such as debts and unpaid bills that become the responsibility of their heirs. Their heirs would also need to pay for your final expenses out-of-pocket.
How do you decide if you even need life insurance? ›
The quickest way to know whether you need life insurance is to ask yourself one question: Would your death have a financial impact on the people in your life? If the answer is yes, then you may want to consider life insurance. Life insurance is a contract between you and an insurance company.
Why do I love being life insurance agent? ›
Problem Solving with a Purpose:
As an independent insurance agent, I find immense satisfaction in solving real-life problems. Life is unpredictable, and it's our job to provide peace of mind in the face of uncertainty.
Why do you want to join life insurance? ›
Possibility for Professional Development. Within the insurance industry, you can advance in your career and learn new skills for professional development. The insurance field offers high levels of training, partially because employees must be knowledgeable on the latest regulations and industry standards.
What not to say when applying for life insurance? ›
For example, applicants might lie about their age, income, weight, medical conditions, family medical history or occupation. It's also relatively common for applicants to lie about their alcohol or drug use.
What is life insurance in one word answer? ›
Life Insurance can be defined as a contract between an insurance policy holder and an insurance company, where the insurer promises to pay a sum of money in exchange for a premium, upon the death of an insured person or after a set period.
Why life insurance is more important? ›
✅ Why is life insurance important? Life insurance is important because it provides financial security to the family in case of the unfortunate death of the policyholder.
What are reasons not to buy life insurance? Reasons not to buy life insurance can include not having beneficiaries, not having beneficiaries who need financial support in the event of your death, or not having enough cash flow to pay for premiums.
Is getting life insurance worth it? ›
Life insurance can be a valuable investment, as a policy can help financially support your loved ones after your death. It can also help cover large debts, like a mortgage or student loans, rather than leaving your family responsible after you die. Plus, life insurance pays off with valuable peace of mind.
What are 3 reasons you may be denied from having life insurance? ›
They can include engaging in risky hobbies and behaviors like skydiving; having a history of DUIs or speeding tickets; having a dangerous job like roofing; having a criminal record or a less than ideal financial history; being a smoker; and failing a drug test.
How much life insurance can I get for $100 a month? ›
How much life insurance can I get for $100 per month? You can buy $500,000 in term life insurance coverage or $100,000 in whole life insurance coverage for around $100 per month, but you'll pay less if you apply for a policy before turning 30.
At what age does life insurance not make sense? ›
Life insurance is no longer needed for many people once they reach their 60s or 70s. At this point they retire, their kids have grown up, and they've paid off their mortgage and other debts.
What is the main reason that people purchase insurance policies? ›
Insurance is a financial safety net, helping you and your loved ones recover after something bad happens — such as a fire, theft, lawsuit or car accident.
Why life insurance is a good job? ›
First, life insurance sales jobs are abundant and easy to find. Second, commission percentages are very high compared to other insurance sales, such as health insurance. Best of all, life insurance agents get paid commission renewals for as long as a sold policy is in force. This creates a passive income stream.
When should you get life insurance? ›
The best time to buy life insurance is usually as soon as possible. That's because the younger and healthier you are when you purchase a policy, the lower your premium will generally be. If you're single with no children, life insurance may not be a priority.
Why do jobs offer life insurance? ›
Why do employers offer life insurance? Many employers offer life insurance as a benefit to their employees by covering at least a large portion of their premium payments. This provides you with life insurance coverage at little or no cost typically for the duration of your time working for that employer.
