Security Mutual Life Insurance Company of New York is one of the best whole life insurance companies, particularly when the focus is on cash value accumulation for personal banking. In the following Security Mutual company review we will cover the history of the company, its financial ratings, the products offered by the company, as well as the specific policy benefits, in an effort to help you determine if it is the right company for you.
Review of Security Mutual Life
If you are searching for life insurance with an emphasis on early cash value growth then Security Mutual Life should be on your short list of potential candidates.
At I&E, we focus on a select group of life insurance providers that provide cash value whole life insurance and indexed universal life insurance. Our goal in writing these company reviews is to equip our readers and clients with the insight and knowledge needed to help you make the right decision on the company that fits your specific needs, goals and objectives.
About Security Mutual Life
Security Mutual Life Insurance Company of New York was established in 1886 as a mutual insurance company under the name Security Mutual Life Association. The company added “New York” to its name in 1960.
What is a mutual insurance company?
A mutual insurance company is owned by the policyholders, not shareholders. Participating policyholders may share in the company’s profits through annual dividend payments. Although not guaranteed, Security Mutual Life has paid life insurance dividends to participating policyholders for over 125 consecutive years.
Security Mutual Life is a top infinite banking company. Which means that it is a popular company for those who understand the pros and cons of infinite banking, which focuses on accumulating cash value in a life insurance policy to be used as a personal banking system to finance various pursuits.
Security Mutual Life practices non-direct recognition. Non-direct recognition provides that the resulting annual dividend offered by SML is not affected by any outstanding life insurance loans.
Security Mutual Life Financial Ratings
As of 2018, of the big four life insurance rating agencies only A.M. Best has provided a financial rating for Security Mutual Life. Its current A.M. Best financial rating is:
- A.M. Best rating: A- (4th highest out of 15)
- S&P rating: N/A
- Fitch rating: N/A
- Moody’s rating: N/A
- Comdex Ranking: N/A
Products Offered by Security Mutual Life
Security Mutual Life Insurance Company’s products and services feature:
Life Insurance including
- Term life insurance
- Whole life insurance
- Universal life insurance
- Survivorship life insurance
- Single Premium Deferred Annuities
- Single Premium Immediate Annuities
- Flexible Premium Annuities
Life Insurance Policies offered by Security Mutual Life
Security Mutual provides both term life and whole life insurance. Often, financial pundits will posit whole life vs term life insurance. However, a benefit of Security Mutual is that you can get a policy that blends both whole life and term life together.
Benefits of Term Life Insurance
- Lower Initial Cost
- Income Protection
- Mortgage Protection
- Protects Insurability
Benefits of Permanent Life Insurance
- Buy Sell Agreements
- Key Man Insurance
- Estate Planning
- Infinite Banking
- Executive Bonus (Section 162) Plans
- Non-Qualified Deferred Compensation Plans
- Split Dollar Life Insurance
- Cash Value Life insurance for Children
Security Mutual Life Insurance Policies [Products and Features]
Term Life Insurance
Term insurance coverage is typically available for 10, 15, 20 and 30 years. Once the initial term coverage expires, the policy is guaranteed renewable to a contractually agreed upon age, usually age 90 or 95.
In addition, most term life policies are convertible. When a policy is convertible term life insurance, it allows the owner of the policy to convert all or a portion of the coverage to whole life insurance coverage before the term policy expires or an agreed upon age.
Whole Life Insurance
Security Mutual Life offers four different types of whole life insurance policies as part of its Security Designer WL4U product line. The four products are:
- WL4U LP121
- WL4U LP100
- WL4U LP65
- WL4U 10Pay
The WL4U LP 100 is payable to age 100 and is the most popular whole life insurance policy when designing a personal banking policy. The policy offers high cash value accumulation, as opposed to a high early death benefit, to maximize cash value growth.
The policy is non-direct recognition, which provides that any outstanding policy loans will not affect the annual life insurance dividend offered by Security Mutual Life.
The policy includes an Advantage Loan Benefit that turns on in year 20. The Advantage Loan Benefit reduces the declared variable rate at which the policyholder can borrow against the cash value in their policy, creating an even better opportunity for arbitrage.
The policy includes a terminal illness living benefits rider that pays out a portion of the death benefit if the insured is diagnosed as terminally ill.
Another key benefit worth mentioning is the elective disability waiver of premium option. The waiver of premium rider provides a 5 year own occupation benefit, which provides that the insured is still eligible for premiums being waived even if he or she is capable of getting a job but that occupation is not under the purview of his or her own occupation.
Whole Life Insurance Dividends
Security Mutual Life has a solid history of paying life insurance dividends. The company has successfully paid participating whole life insurance dividends for 125 consecutive years.
There are many option you can choose when it comes to whole life insurance dividends.
For example, you can:
- Take the cash for whatever you want;
- Purchase one year term insurance;
- Leave with the insurance company to earn interest;
- Pay back a policy loan;
- Use for premium offsets, i.e. to pay your premium completely or for a period of time; or
- Purchase additional paid-up insurance, which increases your cash value and death benefit.
Additional Benefits of Whole Life Insurance
There are many benefits of whole life insurance. We highlighted some of the top whole life insurance advantages below.
Tax free life insurance policy loans
Life insurance loans are tax free* and are available from the carrier by using your cash value as collateral. Your loan will be charged a variable interest rate set annually by the insurance carrier. You can pay back the loan at anytime on whatever terms you choose. Any unpaid interest due will be applied to your principle.
*(In the event of policy lapse, any outstanding life insurance loan may be considered income and subject to taxation).
Tax deferred cash value growth
The cash value in your whole life insurance policy grows tax deferred, and can be accessed via loans or withdrawals.
You are allowed to take out cash from your policy through withdrawals. There is no tax due when withdrawing up to your basis in the policy.
In addition, borrowing against your cash value is a tax free benefit that allows you access your cash value through life insurance loans.
Tax free death benefit
The death benefit paid to your life insurance beneficiaries is not taxable as income. Instead, your policy’s death benefit payout is distributed to your beneficiary income tax free.
However, one way a death benefit may be taxed is if you name your estate as the beneficiary or the total value of your estate is above the the federal estate tax exemption limit of $11,200,000 for an individual and $22,400,000 for couples.
That is why for large estates, having a plan in place to protect your assets, such as utilizing an irrevocable life insurance trust, is a great way to protect your wealth transfer from Uncle Sam.
Security Mutual Life Insurance Riders
In the following section we highlighted some of the primary life insurance riders that are available on select life insurance products available from Security Mutual Life Insurance Company of New York.
Chronic Illness Benefit Riders – Chronic illness riders allow access to a percentage of your death benefit or if you are diagnosed with an eligible chronic illness.
Enhanced Paid Up Additions Rider – Paid-up additions riders allow you to pay additional premium into your policy to purchase additional participating whole life insurance, which increases your death benefit and cash value. This provides a compounding effect, so that dividend payments increase substantially over time as your cash value continues to build.
Level Term Rider – a 10, 15, 20 and 30 year term insurance rider can be added to a whole life policy to increase the initial death benefit coverage and maximize early cash value growth.
Disability Waiver of Premium Rider – A waiver of premium rider allows all premiums to be waived if you become totally disabled. An option for 5-year own occupation definition of total disability is available.
Enhanced Guaranteed Insurability Option Rider – This is a great option for parents or grandparents considering whole life insurance for children because it guarantees the addition of more coverage at certain ages and life events with no evidence of insurability. The insured can choose to add more coverage on his or her 22nd, 25th, 28th, 31st, 34th, 37th, and 40th birthdays. Alternatively, they can add additional coverage for marriage, birth or adoption of a child, or college graduation.
Security Mutual Life Review Conclusion
Security Mutual Life is a great company, offering one of the best whole life policies along with unique riders. In many instances SML will be a great option. But the question remains…
Is Security Mutual Life the right company for you?
It very well may be. But without speaking to you and discovering your goals, needs and objectives we really have no idea what company is best suited to your unique circumstances.
If you have questions or would you like to see how Security Mutual Life stacks up against the other top cash value life insurance companies we represent, please give us a call today for a complimentary life insurance consultation with an Insurance and Estates team member.