Choosing to Use Dividends to Pay Your Policy Premiums

[Pages:99]The enclosed form can be used for: Premium Offset Proposal (POP), Partial Premium Offset Proposal (PPOP),

and Net Premium Offset Proposal (NPOP).

You might think of a POP arrangement as living off the values of your policy. When you utilize a POP option, you prevent your dividend values from growing as they would have grown if you had paid your premiums with out-of-pocket funds. In some cases, you can even deplete them. One important note: If your objective is to increase the value of your policy, you'll want to continue paying your premiums out-of-pocket.

Thank you for looking to New York Life for insurance and financial products. Your insurance policy has many features designed to help you keep pace with changes in your life and in the world around you.

After familiarizing yourself with the pros and cons, you may want to elect a POP option. If so, you will need to fill out the enclosed form and return it to your agent.

If you should change your mind, simply contact your agent and s/he will be happy to help you.

New York Life: The Company You Keep?

Since 1845, New York Life has been providing quality insurance products to individuals, families and businesses. For more than 160 years, we have conducted our business around the central values of financial strength, integrity and humanity -- and have remained committed to being a mutual company, owned solely by our policyholders. This means that, regardless of the economy, our focus is fixed on just one objective: meeting the needs of our customers, now and far into the future. Talk to your New York Life agent today and find out why we are The Company You Keep?.

New York Life Insurance Company New York Life Insurance and Annuity Corporation (A Delaware Corporation) 51 Madison Avenue, New York, NY 10010

19513(02/10)SMRU 00295798CV(Exp.01/12)

Life Insurance

Choosing to Use Dividends to Pay Your Policy Premiums

Pros and Cons The Company You Keep?

A variety of options are available for paying your New York Life permanent life insurance premiums. You can pay premiums by an automatic monthly bank draft (this arrangement is called Check-O-Matic), or you can be billed annually, semi-annually or quarterly.

New York Life offers several premium payment plans described as Premium Offset Proposal, or POP. Under POP, your premium -- or part of it -- is paid with the policy's own built-up values. These values are the dividends that accumulate within your policy.* Your premiums are paid in whole or in part each year by using a combination of your current dividends and your accumulated dividend values.

Premium Offset Proposal (POP)

When current dividend values plus anticipated future dividends are sufficient to cover your entire future scheduled premiums, POP is available to you.* The benefit of this arrangement is that once you elect it, you don't have to pay your premiums with out-of-pocket funds, as long as there are sufficient dividends to continue this arrangement.

Partial Premium Offset Proposal (PPOP)

Partial Premium Offset Proposal allows you to select a fixed dollar amount of premium that is billed to you at scheduled intervals. You elect to pay part of your scheduled premium with out-of-pocket funds, and the balance of your premium is paid through available policy values.*

For example, if your total premium is $300 per quarter, you may choose to pay $200 out of pocket, and the remaining $100 will be taken from your policy values. With this

* Future dividends are not guaranteed and further cash payments would still be necessary if dividends decrease in future years.

option, your out-of-pocket payments may remain constant, assuming dividends continue to be sufficient to support this premium paying method.**

This option is attractive when there are not enough dividends to pay your full premium. PPOP is available to customers being billed annually, semi-annually, quarterly, or by Check-O-Matic arrangement.

Net Premium Offset Proposal (NPOP)

Net POP applies all available dividend values towards your scheduled premium payment(s), and you will be billed for the balance of your premium annually. Therefore, your out-of-pocket expenses will vary annually and will be based on your available values.* Your annual premium notice will reflect the current premium as well as the total dividends, if any, applied toward this premium.

Unlike PPOP, the premium must be on an annual mode. If at any time in the future dividend values are greater than the scheduled premium, excess dividends are applied, according to the current dividend option.

Some Things to Consider

When you select any of the POP options, your out-of-pocket premium expenses will be reduced -- or eliminated -- while the face amount shown in your policy remains the same. Once a POP payment plan is selected, it will stay in force as long as dividend values are sufficient to keep the plan in effect. If your policy dividends ever fall below the amount necessary to sustain the POP plan you selected, you will be notified in advance.

**For policies with a modified premium schedule, it may be necessary to increase the out-of-pocket amount you pay.

There are many circumstances that can make a policy "come off POP" or require additional out-of-pocket payments. For example, you could:

g withdraw dividend values; g take a policy loan or increase a loan; g change your dividend option; g add a policy rider or supplementary

benefit; g increase the amount of your coverage; or g change the ownership or assign your

policy.

On the other hand, if New York Life were to take any of the following actions, it could also cause your policy to "come off POP" and require additional out-ofpocket payments:

g The Company could decrease the current dividend scale.

g The Company could decrease the interest rate it credits on dividends left on deposit.

g The policy's variable loan interest rate could increase, which would increase the amount of loan interest due each year on outstanding loans.

Other POP Considerations

Signing up for any POP plan will terminate previously elected Billable Option to Purchase Paid-Up Additions (OPP) or Check-O-Matic OPP arrangements. You will still be able to take advantage of the OPP rider, but you will be required to make lump-sum premium payments.

There is no magic to any POP arrangement. It doesn't mean that you don't have to pay your full policy premiums; it simply means that your policy pays all or part of those premiums from its own dividend values. When, for whatever reason, those values are insufficient, you would resume out-of-pocket premium payments to keep your policy in force.

ELECTION OF PREMIUM OFFSET ARRANGEMENT

CLIENT INFORMATION

OWNER

ADDRESS

INSURED

CLIENT ID#

Please check one, and select the appropriate dividend option, if applicable:

A. n Premium Offset Proposal (POP)

I elect to have the dividends and the cash value generated by the surrender of paid-up additions of this policy used to pay the policy's annual premium. I have read the accompanying brochure entitled Choosing to Use Dividends to Pay Your Policy premiums: Pros and Cons, and am aware that applying dividends and the cash value generated by the surrender of paid-up additions to pay the premium will result in both the cash value and death benefit of my policy being reduced by the use of these values. I also understand that there are a variety of circumstances under which these values could be depleted, at which time the entire premium may be required as an out-of-pocket payment to keep the policy in force. If my dividend option is not to provide paid-up additions, whole life additions, or dividends on deposit, I elect to change my dividend option to provide: n Paid-Up Additions* n Dividends on Deposit*

B. n Net POP (NPOP)

I elect to have all available dividends and the cash value generated by the surrender of paid-up additions of this policy used to pay the policy's annual premium. I understand that if the dividends and paid-up additions are not sufficient to pay the entire premium, I will be billed for any outstanding premium amount annually. In addition, I understand that because of this arrangement, the premium amounts that I will be billed for can vary annually. I have read the accompanying brochure entitled Choosing to Use Dividends to Pay Your Policy Premiums: Pros and Cons, and I am aware that applying dividends and the cash value generated by the surrender of paid-up additions to pay the premium will result in both the cash value and death benefit of my policy being reduced by the use of these values. I also understand that there are a variety of circumstances under which these values could be depleted, at which time the entire premium may be required as an out-of-pocket payment to keep the policy in force. If my dividend option is not to provide paid-up additions, whole life additions, or dividends on deposit, I elect to change my dividend option to provide: n Paid-Up Additions* n Dividends on Deposit*

C. n Partial POP (PPOP)

I elect to have premiums for this policy paid by paying an out-of-pocket amount as designated below and by having the outstanding amount due paid by using all available dividends and the cash value generated by the surrender of paid-up additions. I understand that if the out-of-pocket amount and the application of policy values is still not sufficient to pay the entire premium, I will be billed for any outstanding premium amount annually. I have read the accompanying brochure entitled Choosing to Use Dividends to Pay Your Policy Premiums: Pros and Cons, and I am aware that applying dividends and the cash value generated by the surrender of paid-up additions to pay the premium will result in both the cash value and death benefit of my policy being reduced by the use of these values. I also understand that there are a variety of circumstances under which these values could be depleted, at which time the entire premium may be required as an out-of-pocket payment to keep the policy in force. If my dividend option is not to provide paid-up additions, whole life additions, or dividends on deposit, I elect to change my dividend option to provide: n Paid-Up Additions*

n Dividends on Deposit*

*If your dividend option is being changed to provide paid-up additions or dividends on deposit, the dividend option change will become effective on the current policy anniversary date, if this request is received by the Company at least 31 days prior to the current policy anniversary date. Any requests received by the Company after this period will take effect on the next policy anniversary.

Sign your name as it appears in the permanent policy or any assignment of it. Under a corporate-owned policy, two officers must sign their full name(s) and give their title(s) and the corporation's name. One such officer may be either the Treasurer or Secretary of the Corporation.

Dollar Amount (out-of-pocket premium you will pay)

Policy Number

Policyowner Signature

Title

Policyowner Signature

Title

Dollar Amount (out-of-pocket premium you will pay) Policy Number Assignee/Date Corporation Name

AGENT INFORMATION

19513A(01/10)

Agent

Date

Service Center

General Office

SERVICE CENTER COPY

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