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Superintendent of Insurance Howard Mills today invited New Yorkers as part of September’s ‘Life Insurance Awareness Month’ to educate themselves further on the benefits that can be derived from this type of coverage.

"Life insurance should be of interest to all those looking to safeguard their financial future," Superintendent Mills stated. "Yet many in the market for these policies need help in determining the type and amount of coverage they might need."

The National Association of Insurance Commissioners’ (NAIC) consumer education web site,, is an excellent source of information on the appropriate types and amounts of life insurance coverage, depending upon whether a potential policyholder falls into one of four categories: young single, young family, established family, or empty nester. The New York State Insurance Department’s online Life Insurance Resource Center also contains an in-depth look at this issue, and can be accessed at

The two web sites explain the two basic types of life insurance: term and permanent. Term life insurance pays a death benefit to beneficiaries if an insured dies within a specified time period, often a term of one or more years. Term life insurance premiums are typically less expensive in the insured’s younger years than premiums for permanent life policies, which usually remain stable for the policy’s duration and contain a savings component.

Permanent life insurance, characterized by products such as whole life, universal life and variable life, also pays a death benefit to a policyholder’s beneficiaries but generally is accompanied by higher premiums because a policyholder can also build cash value during his/her lifetime.

While both term and permanent life insurance provide protection, a New Yorker’s life stage is often a decisive factor in assessing whether to purchase one or the other, or a combination of both. Annuities are also an option.

The insured’s age, health, homeowner status, whether they have children, household expenses, and proximity to retirement are all factors affecting how much and what type of insurance a consumer needs. A family just starting out with an income expected to rise over the years, a mortgage and young children who may go onto college will have different needs from an elderly couple whose home is already paid off, and whose children are grown and financially independent.

After deciding what kind of policy is best, a consumer then should choose the insurance policy that offers the most cost-effective protection in case of an early death, or benefits in case of a long life, depending upon the needs of the policyholder. Because each situation is different, an experienced insurance agent, broker or financial advisor is often able to offer valuable guidance through the process of purchasing life insurance.

Actuarial considerations and market forces affect the amount a consumer pays in life insurance premiums. The age at which an individual purchases a policy or the presence of a serious pre-existing medical condition, like cancer or heart disease, can greatly influence the premium. Other factors are more dependent on an individual’s behavior, like poor health habits, such as smoking or excessive drinking. Life insurers may also assess a potential policyholder’s driving record.

Those who already own a life insurance policy should not drop a policy to buy another one without a thorough study of both the old and the new policies. There may be, for instance, surrender fees if a policy is canceled, or a period of time during which a consumer may not have full coverage. Anyone considering switching a life insurance policy or annuity must, by law, get a full disclosure notice from the agent or broker and time to decide how to proceed.

Annuities, a product sold by most insurance companies, may also be a part of a New Yorker’s financial plan. An annuity is a contract in which an insurance company makes a series of income payments at regular intervals in return for a premium or premiums a policyholder has paid. Annuities are usually bought so that the insured has future retirement income, and annuities can pay benefits guaranteed to last as long as the insured is alive.

The state Insurance Department not only approves every life policy and annuity product sold in the state but also licenses and regulates agents, brokers and insurance companies. To protect themselves, consumers should always confirm that they are dealing with a New York State-licensed insurer, something that can be done by consulting the ‘Insurance Company Search’ at, or by calling the Department’s Consumer Services Bureau at 1-800-342-3736.

Department of Financial Services


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