Life Insurance Strategies

Life insurance can serve many different purposes and in my experience is largely misunderstood.  For starters, one obvious purpose is to provide a death benefit for one's family if they pass away prematurely. This is typically done via term life insurance (anywhere between 10 and 20 years in length).  Term does not build any cash value and eventually expires, but is relatively affordable and helps provides peace of mind.

If someone's objective is to pass money to their family, tax efficiently1, no matter when they pass away, then we would be looking at permanent coverage such as whole life insurance (on one person's life, or a joint/"second-to-die" policy).  As long as premiums are paid on a whole life insurance policy, the policy is guaranteed2 by New York Life Insurance Company to pay out someday, whether that's in 5 or 50 years.  This is often the best way to fund a special needs trust for example, or pass money to children in general for wealth transfer planning.

Finally, life insurance can also act as a tax deferred cash value accumulation.  The same whole life insurance policies mentioned above builds cash value which can be accessed generally tax-free (via policy loans and surrenders, as loans against your policy accrue interest and decrease the death benefit and cash value by the amount of the outstanding loan and interest). 




1Neither New York Life Insurance Company nor its agents or affiliates provide tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.

2Guarantees are based upon the claims-ability of the issuer.

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July 18, 2019 @ 10:56 AM

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