The main purpose of life insurance is to provide resources at your death for someone who depends on you for either monetary or other personal support. Few of us like to think about these issues, but the proper and creative use of protection planning strategies to minimize exposure to risk is something even fewer can afford to ignore.

Estimating your needs:

While the calculation of your insurance needs can be quite complex, resist focusing solely on the income that would be lost at your death, instead consider the actual needs and lifestyle expenses of those you wish to protect.

A few basic questions you may want to consider:

• Who will be affected by your death?
• Is there a financial need?
• Should you take responsibility for it?
• Will the remaining income cover expenses AND allow needed savings for your survivor’s needs?
• Do you have a mortgage that needs to be either paid off or funded annually?
• Do you have other Debt?
• College tuition expenses that have not been funded yet?
• Will your estate be subject to taxes or other expenses?

Types of Insurance:

Another factor to consider when purchasing life insurance is which type works best for your specific needs. There are two basic types, term and permanent.

Term insurance – Temporary insurance that offers protection for a specific period of time. Policies are issued with level premium periods of: 5 year, 10 year, 15 year, 20 year and 30 year durations. Some term policies offer the ability to convert the insurance to a permanent policy or another term policy in the future.

Permanent Insurance - Insurance coverage that provides lifelong protection, including traditional Whole life, Universal Life, Variables Universal Life and many variations. Permanent insurance can combine life insurance with a tax-deferred savings vehicle. The tax deferral of a permanent insurance policy may offer the potential for attractive returns and additional planning possibilities.

Whole Life

Benefit policyholders through every stage of life by providing:

• Guaranteed death benefit protection for those who matter most
• Guaranteed cash accumulation and growth — regardless of market conditions
• Strong internal rate of return compared to other conservative investments
• Level premiums that can help policy owners manage their budgets
• Liquidity for emergencies when there may be no other alternatives
• A source for loans at favorable rates or collateral for third party loans
• Access to policy cash value** (through loans or withdrawals) to help insured individuals reach their goals and dreams, such as:
  • Funding college educations
  • Paying for children’s weddings
  • Supplementing retirement income
  • Buying a vacation home
  • Starting or expanding a business.

All Guarantees are based on the claim paying ability of the issuer.

Universal Life

• Delivers affordable competitively priced life insurance coverage
• Provides guaranteed protection that can be customized to meet your needs up to age 121
• Provides flexibility in premiums and benefits to accommodate your concerns about changing circumstances
• Includes solid cash accumulation that may provide additional flexibility and access
• Offers a comprehensive list of competitive riders to provide even more personalized solutions
• Fills an important product niche as an alternative to term life or whole life insurance.

Variable Universal Life

Variable universal life insurance is a form of Permanent Life Insurance with flexible terms and investment possibilities.

Insurance and Estate Planning

Many people with larger estates will use life insurance to fund a Irrevocable Life Insurance Trust to transfer wealth and provide liquidity needed to protect their legacies from the erosion of estate taxes. This type of trust helps to preserve assets because the death benefit is not subject to estate taxes or income taxes and can be used to pay needed taxes while keeping personal property intact.

Conclusion

The proper use, amount and types of insurance policies, along with their respective cost, terms, and restrictions can be confusing. Seek the advice of a professional before proceeding with any of these strategies. We believe the most accurate way to properly analyze one’s insurance needs is through the comprehensive planning process. If you would like learn more about life insurance needs please contact us at 516.394.2503.

**Accessing cash values may result in surrender fees and charges, may require additional premium payments to maintain coverage, and will reduce the death benefit and policy values. Loans are income tax free as long as policy is not a “modified endowment contract” (MEC) and policy must not be surrendered, lapsed, or otherwise terminated during the lifetime of the insured, and withdrawals must not exceed cost basis. Partial withdrawals during the first 15 policy years are subject to additional rules and may be taxable. Excess policy loans can result in termination of a policy. A policy that lapses or is surrendered can potentially result in tax consequences. You should consult a qualified tax professional for tax advice on your own personal situation.

Investors should consider the investment objectives, risks, charges, and expenses of a variable insurance product carefully before investing. Please carefully read the prospectuses for the relevant variable insurance product and its underlying investment options, which contain this and other information about the product. You can obtain a prospectus from your financial professional.