1. Life Insurance:
A Valuable Tool For
Retirement Planning & Funding
The Company You Keep®
You may think you’re building a comfortable nest egg, but what happens to that nest
egg if something were to happen to you? What if there was a way to protect that nest
egg for your family today, and supplement your retirement later? Sound too good to
be true? It’s not. Permanent life insurance can help you to do both. That’s right — life
insurance.
Supplemental Life Insurance for Traditional Sources of Retirement
Retirement Planning (SLIRP) uses a Funding and Their Limitations
permanent life insurance policy to
protect your savings now, while also Most individuals’ retirement income will be
generating cash on a tax-deferred made up of some combination of: Social
basis that you can use to Security, company or government pension
supplement your cash flow during plans, and personal investments, such as IRAs
retirement. What’s more, permanent and 401(k)s. But consider these facts:
life insurance can provide tax-free
withdrawals within certain limits and • On average, Social Security replaces only 40% of a wage earner’s
a generally tax-free death benefit to salary.2 Currently, the maximum Social Security benefit at full retirement
your beneficiaries1. age is less than $3,000 a month.3
Why Permanent Insurance? • If you continue working, there are limits on the amount you can earn
• Provides a generally income tax- without a reduction in Social Security benefits.
free death benefit.
• Can be tailored to meet individual • When you receive Social Security benefits, they’ll be taxed as income.
needs.
• Can be structured to avoid early • Your Social Security may be reduced if you collect benefits before full
withdrawal penalties. retirement age.
• Cash value can be pledged as
collateral for a loan. • Most pension plans replace only 40% to 60% of pre-retirement
• No government-defined annual earnings, and only 22% of today’s workforce has access to a defined
contribution limits. benefit pension plan4.
Permanent Life Insurance • Your spouse’s retirement income may be reduced significantly if you die
and SLIRP before you both retire.
Permanent life insurance is first and
foremost a tool to protect your loved
ones. But it can also generate cash
value on a tax-deferred basis as long to you and your family; it can depending on the type of life
as the policy remains in force. That provide funds through loans or insurance you and your agent agree
cash value can be a valuable asset through partial withdrawals, best fits your needs5.

2. How SLIRP Works up additions, partial withdrawals and New York Life:
The SLIRP strategy relies on a policy loans reduce the total death The Company You Keep®
permanent life insurance policy’s benefit and cash surrender value, Since 1845, New York Life Insurance
cash value. Here’s how it works: the risk of your policy lapsing Company has been providing quality
• If Whole Life best fits your needs, increases. If you surrender the policy insurance products to individuals,
you can generally access the cash or it lapses for nonpayment of families and businesses. For more
value in your policy tax-free up to premium, the Internal Revenue Code than 160 years, we have conducted
your cost basis6. Your cost basis is requires that taxes be paid on all our business around the central
equal to the amount of premium gains. And, if a policy loan is values of financial strength, integrity
you paid into the policy. This is outstanding when you surrender and humanity — and have remained
done through the surrender of your policy, or the policy lapses, the committed to being a mutual
paid-up additions, which are amount of the loan (including company, owned solely by our
purchased using dividends7. You interest) will be considered taxable policyholders. This means that,
should note that while New York income to the extent of gain in your regardless of the economy, our focus
Life has declared dividends for policy. If your policy remains in is fixed on just one objective: meeting
over 150 successive years, they are force, the amount of your unpaid the needs of our customers, now and
not guaranteed and may be higher loan, plus any interest accrued, will far into the future. Talk to your New
or lower than shown on a policy be deducted from the policy’s death York Life agent today and find out
illustration. If withdrawals do not benefit. why we are The Company You Keep®.
exceed your cost basis, there is no
taxable distribution8. NOTE: To make the SLIRP strategy 1
Use of policy values to provide a cash flow will decrease the policy’s
• If Universal Life best fits your work using a Whole Life policy, you total cash value and death benefit.
2
www.ssa.gov/pubs/10024.html, January 2007.
needs, you can also access the have to choose “paid-up additions” as 3
Based on the current OASDI guidelines. Source:
cash value in your policy tax-free the dividend option for your policy. http://www.ssa.gov/OACT/COLA/examplemax.html
4
“Trends in Retirement Plan Coverage Over the Last Decade,”
up to your cost basis6. With a Under this option, dividends that Monthly Labor Review, Stephanie Costo, February 2006.
Universal Life policy, this is may be paid are used to buy 5
In a whole life policy, dividends earned by the policy are used to
purchase paid-up additional insurance, which is surrendered for its
achieved through partial additional life insurance. This cash value. The cash value is then paid to you. These surrenders
withdrawals of your cash additional protection also has cash reduce the policy’s total death benefit and cash value. In a universal
life policy, partial withdrawals of the policy’s cash surrender value are
surrender value. As with Whole value, which is eligible for dividends. made.
6
The SLIRP strategy assumes that the life insurance policy is not a
Life, if withdrawals do not exceed The cash value from these paid-up Modified Endowment Contract (MEC). Distributions, including loans,
your cost basis, there is no taxable additions is used as distributions to under an MEC are taxable on a gain-first basis and are subject to a
10% penalty tax, with certain exceptions.
distribution8. supplement your retirement income. 7
Paid-up additional insurance is insurance purchased either by
After you reach your cost basis, Always remember, dividends and dividends or pursuant to the Option to Purchase Paid-Up Additions
Rider. It is fully paid-up and requires no further premium payments. It
loans can be made against the interest rates – on which the SLIRP has a cash value and generates its own dividends.
policy’s cash surrender value. strategy relies – are not guaranteed 8
Withdrawals from a life insurance policy within 15 years of the
policy's issuance may be taxable on a gain-first basis up to a
Interest will be charged at current and are subject to change by the statutory ceiling.
rates and added to the amount of insurer. Therefore, the cash flow is 9
Neither New York Life Insurance Company, New York Life Insurance
and Annuity Corporation, nor its agents are in the business of
the loan if not repaid. It is important not guaranteed.9 providing tax, legal or accounting advice. You should consult with
your own tax, legal or accounting advisors to determine whether
to note that since surrenders of paid- Supplemental Life Insurance for Retirement Planning is right for you.
New York Life Insurance Company
New York Life Insurance and Annuity Corporation (a Delaware Corporation)
51 Madison Avenue, New York, NY 10010
www.newyorklife.com 13544(07/07) SMRU 00351246CV(Exp.07/09)