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How Life Insurance Works in New York
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Types of New York Life Insurance
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Term Life Insurance
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Permanent Life Insurance
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New York Life Insurance Laws
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The Cost
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New York Life Insurance Resources
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FAQs
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EZ Can Help!
How Life Insurance Works in New York
When you purchase life insurance, you enter into a legally binding contract with the insurance company of your choice. You agree to pay the monthly premiums. In exchange for a lump-sum payment to your loved ones (or beneficiaries) if you die while your policy is still in effect. Your beneficiaries can use this death benefit for anything they want. Such as mortgage payments, retirement or college savings, or simply to replace your income.
If you have dependents, debts, or other financial obligations that must be met even if you die, you should seriously consider purchasing life insurance. But if you are the primary or sole provider for your family, having life insurance is essential. Your policy will ensure that your loved ones can maintain their current standard of living even after you pass.
Types of New York Life Insurance
There are so many different types of life insurance policies available today that almost anyone can find one that is right for them. You’ll have to make a lot of decisions about what policy is right for you. But the first will be between the two main types of life insurance policies:
- Term life insurance
- Permanent life insurance
To make this decision, consider how long you want your coverage to last. As well as how much you’re willing to spend and what extra features, if any, you want included with your policy.
Term Life Insurance
Because of its lower premiums, term life insurance is more popular than permanent life insurance. Term life insurance premiums are typically lower because your policy will not be in effect indefinitely. Instead, when you buy term life insurance, you specify how long you want to be covered for. The term of a policy is usually 15 years, but policies with terms ranging from one year to 30 years are available.
Term life policies are fairly straightforward. In most cases, your monthly premium will not change for the entire term of your policy. If you die while the policy is still in effect, your beneficiaries will receive a tax-free death benefit.
There are several types of term life policies available, including:
Level Term Life Insurance
Level term life insurance has a death benefit and premium payments that are set at the time of purchase. They will not change at any time during the policy’s term. Level term is the most common type of term life insurance policy.
Annual Renewable Term Life Insurance
Annual renewable life insurance is a one-year term life insurance policy. You will be able to renew your policy on an annual basis, but the premiums will rise with each passing year.
Increasing Term Life Insurance
The death benefit of an increasing term life insurance policy grows over the policy’s term. For example, your benefit could increase by 5% per year. Term insurance premiums, unlike those of other types of term life insurance policies, fluctuate over time.
Decreasing Term Life Insurance
The death benefit of decreasing term life insurance decreases over time while the premiums stay the same. These policies are typically purchased for coverage while repaying a loan or mortgage. As the loan is repaid, the value of the death benefit decreases.
Return-of-Premium Life Insurance
Return-of-premium (ROP) insurance is a type of term life insurance in which your premium payments are refunded if you do not die before the policy expires. ROP policies are significantly more expensive than other types of term life policies. But many people find the prospect of receiving their premiums back appealing enough to outweigh the extra cost.
Permanent Life Insurance
Unlike with term life insurance, your permanent life insurance policy will remain in effect as long as you continue to make premium payments. Because of this, and because permanent life insurance policies typically include a type of savings account that earns interest (known as cash value). So, permanent life premiums are typically higher than term life premiums.
There are numerous types of permanent life insurance policies to choose from, including:
Whole Life Insurance
Whole life insurance not only provides a benefit to beneficiaries upon death, but it also includes a savings component, which means that a cash value accumulates as you pay your premiums. Throughout the life of this policy, interest will be accrued at a predetermined rate on a tax-deferred basis.
Universal Life Insurance
This type of policy is very flexible because you can change both the amount of the death benefit and the amount of the premium payments. Your premium payments will be applied to both the cost of insurance (COI) and the cash value, and as the cash value grows, you will be able to use it to pay your premiums. You will also be able to lower your premiums by lowering the amount of the death benefit associated with your policy.
Indexed Universal Life Insurance
The cash value of an indexed universal life insurance (IUL) policy can be invested in a stock index, so you have the opportunity to accrue more interest than with a set rate. An IUL’s policy’s premiums can be adjusted in the same way that universal life policy premiums can: they can increase and decrease in tandem with the policy’s cash value. You might not have to pay a premium one day because the cash value will cover the entire cost.
Variable Universal Life Insurance
The cash value of a variable universal life (VUL) policy, like the cash value of other permanent life insurance policies, can be invested, but VUL policies include investment subaccounts that are similar to mutual funds. And, as with traditional universal life insurance, you’ll be able to adjust your premium payments based on how much cash value you have accrued.
Final Expense Life Insurance
A final expense life insurance policy pays a small death benefit, typically ranging from $2,000 to $35,000. The death benefit from final expense insurance is intended to cover final expenses such as a burial, cremation, or funeral service. But your beneficiary will be free to spend the death benefit money however they see fit. Such as on a vacation or to pay their taxes.
Because you will not be required to undergo a medical exam or wait for coverage to begin, this type of policy is often a good choice for those who are older or in poor health. But keep in mind that these policies are frequently more expensive than comparable policies. And the death benefit is typically low.
New York Life Insurance Laws
In the case of life insurance policies, the federal government has largely delegated the responsibility of regulating the insurance industries and protecting consumers to the states. The primary regulating force behind the New York insurance industry is Article 32 of the New York Consolidated Law, but other legal provisions have also been adopted as consumer protection laws. The industry is regulated by the New York State Department of Financial Services.
The following are the most important rules that may apply in your situation:
Free Look Period
A “free look period” is the amount of time that new policyholders have after signing their policy to review and test it. This period is set by law in New York state at 10 days. That means New Yorkers have 10 days to try out their new life insurance policy before deciding whether or not to keep it. If you purchase a life insurance policy in New York, and you decide to cancel your policy within this 10-day free look period, you will receive a full refund for any premiums you have already paid.
Grace Period
New York mandates that insurance companies give a grace period for late payments. The grace period in New York is set at 31 days. Which means you will have 31 days to make up for late payments before their insurer cancels their policy.
Benefit Guarantee
If your life insurance company in New York goes out of business, your policy will be protected by the Life Insurance Company Guaranty Corporation of New York. To be eligible for this guarantee, your insurer must be properly licensed in New York.
The New York Life Insurance Company Guaranty Corporation will insure your policy for up to $500,000. This is the maximum amount that can be awarded for any single life insurance policy.
Settlement Timelines
When a life insurance claim is filed in New York State, the insurer has 30 days after receiving proof of death to pay the benefit to the beneficiary. If the insurer fails to pay the beneficiary on time, the beneficiary’s account will accrue interest. And the insurance company may face fines and other penalties.
The Cost
Your premium price will depend on a number of factors, such as your age, health, and even your gender. For the quickest and most precise estimate of costs, please contact one of our EZ agents. Simply give them some basic information, and they will be able to use it to find you free quotes that are tailored to you. But to give you an example of what life insurance premium prices look like in New York, a healthy, nonsmoking 31-year-old man in New York could pay anywhere from $19 to $46 per month for a $966,000 policy with a 20-year term.
New York Life Insurance Resources
In New York, there are several resources available that can help you with any problems with your insurer or policy. These resources include:
- NYS Department of Financial Services – The New York State Department of Financial Services offers a variety of resources to New York residents, including consumer information, a lost policy locator, and complaint forms available in ten different languages.
- Life Insurance Company Guaranty Corporation of New York – The Life Insurance Company Guaranty Corporation of New York is a non-profit organization that protects life insurance policyholders in the event that the issuing company fails. The organization also assists New Yorkers in locating lost life insurance and annuity policies.
FAQs
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Does New York require life insurance?
No, you will never be forced to get life insurance. It is always your choice.
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What are the best life insurance companies in New York?
In New York, there are many good ways to get life insurance. MassMutual, New York Life, Guardian, Northwestern Mutual, and MetLife are at the top of the list.
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How much does life insurance cost in New York?
There are many things that can affect how much life insurance costs, but here’s an example. A healthy 31-year-old woman in New York will pay an average of $29.87 per month for a 20-year term policy that costs $966,000 and lasts for 20 years. A healthy 31-year-old man, on the other hand, will pay about $35.97 for the same policy.
EZ Can Help!
We at EZ know that everyone has unique requirements, priorities, and financial constraints. We also understand that you want the best for your family without depleting your savings account. So, we make every effort to simplify the process of purchasing life insurance. We also guarantee that all of our services will always be completely free. You will not be charged any additional fees for assistance with anything, from answering basic questions to navigating policy selection to the enrollment process and beyond. Simply enter your zip code in the space provided below or call us at 877-670-3560 to get started.
