AXA Equitable Life Insurance Company
I want to know my options
a guide to life insurance
Life Insurance: • Is Not a Deposit of Any Bank • Is Not FDIC Insured • Is Not
Insured by Any Federal Government Agency • Is Not Guaranteed by Any Bank
or Savings Association • Variable Life Insurance May Go Down in Value
GE-61369 (4/11)
getting started
Table of Contents
Protection for Your Family 1
What Is Life Insurance? 2
A Multipurpose Financial Planning Tool 2
Basic Types of Life Insurance 3
Features of Permanent Life Insurance 4
Permanent Life Insurance 5
Tax-Related Benefits 7
You Keep More for Yourself and Your Family 7
Chosing a Life Insurance Company 9
Your Financial Professional Can Help 9
Life Insurance Worksheet 10
Life Insurance Terminology 12
protection for your family
One of the most important things in life is knowing that the financial needs of your loved ones
will be taken care of should something happen to you. Providing this type of security for your
family is easy when you and your financial professional add life insurance to your financial plan.
important note
There are fees and charges associated with life insurance policies and, depending on the policy, can include cost
of insurance charges, surrender charges, administrative charges, investment management fees, mortality and
expense risk charges, and charges for any optional benefits.
what is life insurance?
A multipurpose financial planning tool
Life insurance is designed primarily to protect your family’s financial security after you die. It is a
contractual agreement in which premiums are paid to an insurance company. In return for these
premium payments, the insurance company will provide a benefit to a beneficiary upon the Insured’s
death. But some types of life insurance can also help you build assets to meet needs during your
lifetime. So it can be a smart addition to any financial plan — because it can serve different functions
within your overall investment strategy.
Security for your family, should something happen to you
Life insurance can help:
• Pay off your debts and taxes after your death
• Allow your family to maintain its standard of living
• Support your dependents’ goals and dreams
• Provide immediate access to cash
Financial support during your lifetime
Cash value life insurance also may serve as:
• A supplement for your retirement income
• A supplemental funding vehicle for a college
education, starting a business, or buying a second home
If you need cash, know that withdrawals from life insurance policies may be subject to fees, penalties
and income taxes depending on the specific life insurance policy and the policyholder’s tax situation.
Withdrawals reduce the policy value and death benefit.
2
Basic Types of Life Insurance
You choose what’s right for you
There are essentially two types of life insurance: term
term insurance example
insurance and permanent insurance. The difference
between the two is similar to the difference between A married couple want to insure the life
renting and owning. The choice you make will depend of the primary wage earner, age 45, until
upon your financial situation and your goals. Your the mortgage on their house is paid off.
financial professional can help. So they purchase a 10-year level term life
insurance policy.
Term life insurance: “renting”
After 10 years, the couple may have up to
• Offers protection for a specified period of
three options: they can renew their policy at a
time — the term of the policy
highter cost, convert to permanent insurance
• Requires the policyholder to pay only for the
for a higher premium without having to provide
protection against death
evidence of insurability, or, if they no longer
• Does not enable policyholder to build cash value.
need the protection, they can end the policy
• Death benefit is paid if the Insured dies during
and walk away with no cash.
the specified period
• Premiums generally remain level or increase
throughout the specified period
• It can be considerably less expensive initially
than permanent insurance and gives policyholders
the alternative of using the savings to invest on important note
their own
All guarantees are subject to the claims-paying
Permanent life insurance: “owning” ability of the issuing life insurance company.
• Offers the opportunity for protection for the entire life Death Benefit Differences:
of the Insured Death benefit options include the option to
• Allows you to potentially grow the cash value of use non-guaranteed dividends to purchase
the policy additional death benefits for traditional whole
• Comprises four main types: whole life, variable life, life. Interest-sensitive whole life has level and
universal life, and variable universal life variable death benefit options.
• Each type may offer different premium payment
methods, death benefit features, investment options,
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and degrees of flexibility
Features of Permanent Life Insurance
Increase your options and flexibility
If you and your financial professional decide
that permanent life insurance will best meet
Buying Insurance That Meets Your Needs
your family’s financial needs, you have a number
WHOLE LIFE of options to choose from. Again, the decisions
Cash value build-up
you make will depend on your specific needs and
Choice of death benefit options
how you believe they may change throughout
Guaranteed fixed premiums
your life.
VARIABLE LIFE
Potential for cash value build-up
Underlying investment options important note
Current interest rate or investment For variable and variable universal life
performance crediting policies, investment management fees are
Guaranteed fixed premiums assessed on each investment option. They
are deducted on a daily basis and vary
UNIVERSAL LIFE
from option to option.
Potential for cash value build-up
Current interest rate A surrender charge may be applicable to
Premium payment flexibility whole, universal, variable and variable
Choice of death benefit options universal life. It is a contingent fee for
surrendering the policy or reducing the
VARIABLE UNIVERSAL LIFE cash value(s) from a life insurance policy
Potential for cash value build-up during the surrender charge period. A few
Underlying investment options carriers impose a partial surrender charge
Current interest rate or investment on withdrawals of cash value.
performance crediting
Premium payment flexibility
Choice of death benefit options
For permanent policies, total cash value is never guaranteed.
Whole life, however, does have a guaranteed minimum cash value.
4
Permanent Life Insurance
Whole Life Insurance important note
• You pay a guaranteed fixed premium for the life of the Variable life and variable universal life policyholders
contract.
should understand that while poor investment
• Premiums are invested in the insurance
company’s general account.
performance can lead to a reduced cash value and
• Regardless of the general account’s a lower death benefit, and possible lapse of policy
performance, you’re guaranteed to without value, strong investment performance
receive the policy’s guaranteed minimum can lead to a higher cash value and increased
cash value and your beneficiary is guaranteed
death benefit. Also, assets invested in underlying
to receive a minimum death benefit.
investment portfolios are kept completely separate
• You may also receive dividends, which are not
guaranteed. from the insurance company’s general account.
• The amount of the cash value and death benefit above Therefore, in the event that the insurance company
the guaranteed minimum will depend upon whether becomes insolvent, separate account assets that
non-guaranteed dividends are paid. support the cash value are protected from the
company’s creditors. However, death benefits
Variable Life Insurance (VL)
in excess of cash value do not have this same
• You make guaranteed fixed premium payments and protection. Variable life offers policyholders more
receive a guaranteed minimum death benefit. upside potential for growth than whole or universal
• You have the flexibility to invest your premiums in one or
life. However, both the policy’s cash value and the
more underlying portfolios that offer different levels of risk
and growth potential. These investments portfolios provide amount of the death benefit have the potential to
long-term growth potential, tax-deferred earnings, and the fluctuate up or down based on the performance
ability to make tax-free transfers of the investment options that are selected. Your
among the investment portfolios.
cash value may be worth more or less than the
• The cash value of the policy is
premiums you paid.
not guaranteed.
• In addition to the variable investment Amounts in the policy’s variable investment
portfolios, many insurance companies options are subject to fluctuation in value and
offer a guaranteed investment option providing a
market risk, including loss of principal.
minimum guaranteed rate for a specific period of time.
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Universal Life Insurance Universal life policyholders should
• Premium payments are flexible. After the first initial premium payment, understand that a decrease in the
you decide the amount and timing of premium payments (subject to death benefit may result in the
certain minimums and maximums).
imposition of surrender charges.
• The policy continues as long as there is enough cash value to
cover monthly costs of insurance and administrative charges.
• Your cash value earns interest at a rate
that is set periodically by the insurance
company and is generally guaranteed
not to drop below a certain level.
Please consider the charges, risks,
• Choose one of two death benefit options: a level
expenses and investment objectives
benefit equal to the policy’s original face amount, OR a variable
benefit equal to the original face amount plus any existing policy carefully before purchasing a variable
account value. life insurance policy. For a variable
life insurance prospectus containing
Variable Universal Life Insurance (VUL)
this and other information, please
• Premium payments are flexible. After the first initial premium payment,
ask your financial professional or
you decide the amount and timing of premium payments (subject to
certain minimums and maximums). contact the company. Read it and
• The policy continues as long as there is enough cash value to cover consider this information carefully
monthly costs of insurance and administrative charges. before you invest or send money.
• You have the flexibility to invest your premiums in one or more
underlying portfolios that offer different levels of risk and growth potential.
These investment portfolios provide long-term growth
potential, tax-deferred earnings, and the ability to make tax-free
transfers among the investment portfolios.
• In addition to the variable investment keep in mind
portfolios, many insurance companies
offer a fixed-rate account providing a All guarantees are subject to the
minimum guaranteed rate for a specific claims-paying ability of the issuing
period of time. life insurance company.
• Choose one of two death benefit options: a level benefit equal to
the policy’s original face amount, OR a variable benefit equal to
the original face amount plus any existing policy account value.
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tax-related benefits
important note
Distributions from life insurance policies
identified as Modified Endowment
Contracts (MECs) under the Internal
Revenue Code are taxed differently from
You Keep More For Yourself those life insurance policies that are not
and Your Family modified endowments. A life insurance
policy will be a MEC when it is:
Death benefit is generally income-tax-free 1. A life insurance policy as defined by
The death benefit of your permanent life insurance policy is Section 7702 of the Internal Revenue
generally passed on to your beneficiaries free from federal Code; and
income tax. 2. The policy’s premium payment is
deemed “too large” when measured
Premium withdrawals may be tax-free against the death benefit provided by
Under current federal tax rules, you may generally take the policy.
income-tax-free withdrawals under a life insurance policy,
which is not a Modified Endowment Contract (MEC), up to Please contact your financial professional
your basis of the contract. Special rules apply to MECs for more details on MECs. Withdrawals
and to certain withdrawals taken during the policy’s first made from a life insurance policy during
15 years. Withdrawals and loans reduce the policy’s cash the surrender charge period may incur
value and death benefit, and increase the chance that the surrender charges. Loans and withdrawals
policy may lapse. will reduce the cash value and the amount
of the death benefit. Outstanding loans
Transfers are tax-free will accrue interest. Withdrawals will be
Transfers among the underlying investment options of a taxed at the recipient’s current tax rate.
VL or VUL insurance policy are not subject to current
income or capital gains taxes.
7
Withdraw early with no penalty
You can take loans or withdrawals from a life Without taxes, earnings that would normally end up
insurance policy prior to age 59½ without the
in Uncle Sam’s pocket may remain in your policy to
10% early withdrawal penalty as long as the
potentially generate additional earnings.
policy is not a MEC.
Accumulation is tax-deferred
Any earnings accumulated in your insurance
policy’s cash value grow free from taxes until you
withdraw them. Please note that in a variable life With Taxes
insurance policy, cash value growth is not Without Taxes
guaranteed.
Your money may grow faster
without taxes
• $10,000 annual hypothetical investments
• Assumed 8% hypothetical annual compounded
rate of return
• Results shown at the end of 10, 20 and
30 years
Taxable results assume a 25% federal tax rate. The results do not
Whether you purchase whole life, variable life,
reflect actual performance of any underlying investment portfolio,
universal life or variable universal life insurance, and your own results will vary. Results without taxes taken out do
you may have the opportunity to take advantage of not include mortality and expense risk charges, administrative
some important tax-related benefits. fees, or any other expenses associated with life insurance. If these
charges were included, the results would be lower. Recipients will
pay taxes at the time of distribution.
8
choosing a life
insurance company
Your Financial Professional Can Help
A little research can go a long way when buying life
insurance. After all, the financial strength of an insurance
company is what enables that company to deliver on its keep in mind
promise to you. Your financial professional can help you
Although a high financial rating does
review important factors, such as the independent
not guarantee financial stability, it
ratings of insurance companies, as well as their
customer service quality, before you purchase a policy.
may be an accurate indication of a
company’s ability to meet its financial
Independent ratings obligations to its policyholders. Keep in
There are a number of independent rating organizations mind, however, that the ratings provided
that measure the financial strength of insurance by these companies. do not reflect
companies, including: the performance of the underlying
• A.M. Best Company investment portfolios contained in a
• Standard & Poor’s Corporation
variable policy, and that each portfolio
• Moody’s Investors Service
subjects investors to a different degree
• Fitch, Inc.
of risk.
Service quality
Unless you purchase term insurance, you may own your
policy for life. So it makes sense to consider a company
that offers high-quality customer service, including:
• Easy-to-read policy statements
• Easy telephone and Internet access to policy information
• Knowledgeable service representatives 9
Life Insurance Worksheet
Estimate your life insurance needs
With this information, you and your financial professional can start to develop an insurance plan that
suits your budget and provides the financial protection your family needs.
Step 1
Determine what your family’s financial needs might be if you passed away.
1. Final expenses 4. Mortgage balance
Final medical/hospital costs Current mortgage balance $
Attorney/executor fees
Probate costs 5. Debt repayment
Total needed $ Auto loans
Home equity loan
While these expenses may vary
depending on your situation, typically
Credit card balances
they range between $5,000 and $15,000. Other
(Source: Fidelity Investments, 2011.)
Total currently needed $
2. Emergency funds 6. Annual dependent/home care expenses
Major home repairs Care for dependent(s)
Auto repairs Home maintenance
Medical emergencies Food/clothing
Total needed $ Annual amount $
Years to continue support
3. Children’s education funds Total needed* $
Total cost of degree(s)
Number of children 7. Calculate total amount needed __________
Total needed $ Add “totals needed” from numbers 1–6.
* No inflation factor used.
According to the National Center for Education Statistics, the average yearly cost of public and private college as of
12/2010 were $19,100 and $37,000 respectively. So, if your child wanted to attend a private four-year college,
the total estimate would be $148,000.
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A must-have for your financial plan
No matter what kind of life insurance you choose, there’s no substitute for the peace of mind it may be able
to provide. Life insurance is one of the ways you can protect your family’s financial security should something
happen to you.
Talk to your financial professional about
your long-term needs, and he or she can
Step 2 help you determine:
Detrmine your existing liquid assets and life
• Which type of insurance is right for you
insurance protection.
8. Total assets and life insurance • How much protection you and your
Life insurance family need
(including group life policy)
• The best way to invest your
Cash and savings accounts
premium dollars
Other liquid assets
Total available $
Step 3
Calculate the amount of additional life insurance
you need.
9. Enter total of your family’s $
financial needs
From number 7
10. Enter total available liquid assets and $
existing life insurance
From number 8
11. Calculate the additonal $
life insurance neededs
Subtract number 10 from number 9 above.
To protect your family’s financial security, how much can
you comfortably set aside each month?
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life insurance
terminology
Beneficiary – The person you, the policyowner, designate to receive the insurance benefit when you
die. (You may designate more than one beneficiary.)
Cash value – The cumulative value of your premium payments and the earnings of the account, minus
any front-end sales fees, state premium taxes, insurance costs and other administrative expenses.
Death benefit – The money your beneficiary will receive when you die.
General account – The account where whole life as well as universal premiums and other assets of
the insurance company are invested.
Investment management fee – For variable and variable universal life policies, investment
management fees are assessed on each investment option. They are deducted on a daily basis and
vary from option to option.
Premiums – The payments you make into your insurance policy.
Separate account – The account where the premiums (or cash value) of a variable life or variable
universal life insurance policy are invested.
Surrender charge – A fee assessed for terminating or withdrawing cash value(s) from a life insurance
policy during the surrender charge period. Surrender charges may be applicable to whole, universal,
variable and variable universal life.
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This brochure was developed in conjunction with Fidelity Investments. Fidelity Investments and AXA Equitable Life Insurance Company are
not affiliated.
Neither AXA Equitable, AXA Advisors, LLC nor AXA Distributors, LLC provide tax or legal advice. You should seek the guidance of competent
legal and tax counsel before making final investment or planning decisions.
Please be advised that this document is not intended as legal or tax advice. Accordingly, any tax information provided in this document
is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed
on the taxpayer. The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed,
and you should seek advice based on your particular circumstances from an independent tax advisor.
Life insurance is issued by AXA Equitable Life Insurance Company, New York, NY 10104. Variable life insurance is co-distributed by affiliates
AXA Advisors, LLC and AXA Distributors, LLC, both located in New York, NY 10104.
© 2011 AXA Equitable Life Insurance Company. All rights reserved.
1290 Avenue of the Americas, New York, NY 10104, (212) 554-1234
Visit our website at www.axa-equitable.com.
Fidelity Investments® and pyramid design are registered service marks of FMR Corp. Fidelity Investments Institutional Services Company, Inc.,
82 Devonshire Street, Boston, MA 02109.
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GE-61369 (4/11) Cat. #132722 (4/11)