Best Life Insurance Companies in Yonkers

Frequently Asked Questions

• Can you give life insurance as a gift to a minor in Yonkers?

  Gifting life insurance to children in Yonkers is possible, but this depends on the age of the child. According to New York law, you can gift a life insurance policy to minors over the age of 14 and six months. However, minors aged 14 years and six months old and below are prohibited from owning life insurance policies, but they may be beneficiaries. Adults planning to give life insurance as a gift may designate a custodian to receive, hold, and manage the policy until the minor reaches the age of majority.

• Does legacy gifting of life insurance in Yonkers have tax advantages?

  As a life insurance policy owner in Yonkers, you have the freedom to choose who your beneficiaries will be, and you can name charities or nonprofit organizations as one of them. Note that there are no federal or state tax advantages when you add charities or nonprofit organizations as your life insurance beneficiary unless your estate is large enough to owe taxes. If you have a large estate and it owes taxes, it will be able to deduct from the cash value of the insurance plan or the total amount of premiums paid.

• What does a cash value mean in a whole life insurance plan in Yonkers?

  A whole life insurance policy in Yonkers is a type of life insurance that protects the policy owner for life as long as they continue to pay their premiums or monthly payments to the insurance company. This type of insurance also comes with a cash value component. A cash value accumulates over time and can be withdrawn or borrowed. The amount increases every year on a schedule guaranteed by the insurance provider and can also grow from annual dividend payments if the plan is purchased from a mutual whole life insurance company.

• Will the cash value of a whole life insurance policy in Yonkers be taxed?

  No, the cash value of a whole life insurance policy in Yonkers will not be taxed. This is called "tax deferred," wherein the money grows faster as it is not being taxed. As a result, the interest on the cash value is applied to a higher amount. The earnings in the cash value will only be taxed if the policy is surrendered, transferred for value, or if it ceases to meet the IRS definition of a life insurance contract. Beneficiaries also do not need to report the proceeds as gross income, but any interest received is taxable and should be reported.

• Do beneficiaries of life insurance in Yonkers need to pay taxes?

  The death benefits of a life insurance policy in Yonkers are tax-free. Note that when a policyholder chooses to hold on to proceeds after their death and have them distributed to beneficiaries in a series of installments or at a later date, the funds are earning interest. When the payment is made to the beneficiary, there may be interest, or both principal and interest earned. The principal portion is tax-free, but the interest portion needs to be taxed as if it were ordinary income. Also, death benefits could be deemed taxable income if the ownership of the life insurance plan is transferred to another party before the original owner's death.

• Which is better, term or whole life insurance?

  Life insurance is a personal financial tool, so the right type of insurance for you depends on your goals and current situation. One of the main differences between term life insurance and whole life insurance is that term life insurance only covers you for a set period of time. Once you meet the premium payment requirements on a whole life plan, it covers you for the rest of your life. Whole life insurance also builds cash value, making it a potential investment. But whole life insurance is typically much more expensive than term life insurance.

• How much life insurance do I need?

  A common recommendation is purchasing life insurance that is equal to five times your current salary, or more. But you can also estimate how much life insurance you need by adding up your debts, annual expenses for dependents multiplied by the years you want to ensure support, and any other items you wish to cover, such as a future wedding or college tuition.