WHAT IS LIFE INSURANCE AND WHY DO I NEED IT?
A death in the family is not only emotionally devastating, it can also take a tremendous toll on the future financial security of a family. Suddenly, without the deceased’s income, paying the mortgage or providing for a child's college education may become much more difficult.
Those who buy life insurance do so to help ensure their loved ones are taken care of financially. Life insurance is a promise by an insurance company to pay those who depend on you a sum of money upon your death. In return, you make periodic payments called premiums. In the event of your passing, life insurance provides money directly to the individuals you select, your beneficiaries, who can use the money as they see fit, including:
- Replacing lost income
- Covering basic living expenses
- Paying household debts, estate taxes and funeral/final expenses
- Funding a child’s education
- Supplementing retirement savings
WHAT TYPE OF LIFE INSURANCE IS OFFERED BY THE CITY OF YONKERS?
City of Yonkers employees are eligible for both term life insurance and permanent whole life insurance.
Term life insurance pays a specific lump sum to your loved ones for a specified period of time. If you stop paying premiums, the insurance stops. Term policies pay benefits if you die during the period covered by the policy, but they do not build cash value. They may also give you the option to port at an adjusted premium. That is, you can take the coverage with you if your leave your company and the rates would adjust to an unsubsidized rate.
Generally, you should consider a term life insurance policy to:
- Get valuable coverage at an affordable price
- Help cover specific financial responsibilities like a mortgage or college expenses
- Supplement a permanent policy
Permanent whole life insurance policies do not expire. They are intended to protect your loved ones permanently. Permanent whole life insurance policies accumulate cash value. That means, the value of the policy will grow each year, tax-deferred, until it matches the face value of the policy. The cash can generally be accessed via loans or withdrawals, and can be used for a variety of purposes. This type of plan is typically portable so coverage can continue if employment terminates.
Consider a permanent insurance policy if you want:
- Protection for life
- Payments that stay the same each year
- To put additional money into the policy on a tax-favored basis
- Cash value you can use while you are living
WHAT ARE THE ADVANTAGES OF PURCHASING LIFE INSURANCE THROUGH THE CITY OF YONKERS?
Getting life insurance through work can be an easy way to protect your family. If your employer offers a group plan, consider signing up for advantages that may include:
- Competitive group rates
- Guaranteed issue, meaning you can get a certain amount of coverage without answering health questions or taking a medical exam
- Convenient payroll deductions
- Easy access to enrollment and educational tools that can help you make the right decisions about the type and amount of insurance that’s right for you
- The confidence of knowing that your employer has reviewed and selected the plan
I ALREADY HAVE LIFE INSURANCE – SHOULD I PARTICIPATE IN THIS PLAN?
It’s a good idea to review your coverage every few years to make sure it still meets your financial needs. This allows you the opportunity to obtain additional coverage without a medical exam. It might be time to re-evaluate your coverage if you:
- Recently married or divorced
- Received an inheritance
- Purchased a new home
- Refinanced your home mortgage in the past six months
- Have a child or grandchild who was recently born, adopted or about to enter college
- Provide care or financial help to a child or parent
- Want to ensure that financial resources are available for a loved one’s assistance or long-term care
WHAT ARE SOME BASIC LIFE INSURANCE TERMS I SHOULD KNOW?
- Policy owner:The policy owner is the person who owns the life insurance policy. In many cases, the policy owner is also the person who is insured by the policy. However, the policy owner may also be a relative of the insured, a trust, partnership, or a corporation.
- Beneficiary: A beneficiary is the person(s) selected by the policy owner to receive the life insurance payments upon the death of the insured.
- Premium: Premiums are the payments made to the insurance company to purchase and keep a policy active.
- Death benefit: A death benefit is the amount paid to the beneficiary at the time of the death of the insured.
- Face amount: The face amount of the policy is the amount of the death benefit as stated in the policy. This does not include additional amounts that the policy may provide.
- Insured/insured life: Insurability refers to how likely an applicant is to be offered coverage based on current health, medical background, family history and other factors.
