There is still an Israel. There are still a chosen people of God, but it has nothing to do with the modern state of Israel or the Jewish people. One of the changes the New Covenant brings to much greater clarity is the fact that the church is the new Israel, or rather, is Israel as it was always meant to be. This is not the same thing as replacement theory which states the church replaces Israel. The church doesn’t replace Israel; it is Israel, the chosen people, in its mature state.
All the Old Covenant passed away and gave way to the greater New Covenant. This includes the Promised Land, Jerusalem, the Temple, the whole sacrificial system, the Aaronic priesthood, and the people who were caretakers of these things. It’s always been about faith. This becomes much clearer in the New Covenant and because of this, Gentiles can be full members of the New Covenant. In fact, the Scripture goes so far to say there is no longer a Jew and Gentile distinction, only believers and unbelievers.
The New Testament tells us that the Promised Land is now the whole earth, (Matthew 16:18); the temple is made of people (Ephesians 2:19-22); there is a new Jerusalem (Galatians 4:21-31); a new priesthood (Hebrews Ch.7-9); those who have faith in Jesus are the “chosen people” (I Peter 2:4-10); those who have faith are the true children of Abraham (Galatians 3:23-4:7). In fact, those who count themselves Abraham’s heir according to the flesh are explicitly shown not to be true descendants (Romans 9:6-8), or even true Jews (Romans 2:28, 29).
It is not by accident that Jesus chose twelve apostles. These do not replace the twelve tribes but are the fulfillment of what began with the twelve tribes of Israel. The twelve apostles will bring the whole system of salvation to its glorious end. It’s like Old Covenant Israel was a young child, or a tender plant, and the church is the full grown adult, or a mature, fruit-bearing tree. There is only one body of Christ, and there always has been. This unity of Old Covenant and New Covenant is symbolized in Revelation by the twenty four thrones representing the twelve tribes and twelve apostles. In addition, the Holy Jerusalem at the end of Revelation has the names of the twelve tribes on its gates and on its twelve foundations are the names of the apostles.
All of this means that modern Israel is simply a nation like all others, and the Jewish people are a people in need of the Gospel of Jesus Christ like any unbelievers. No one is saved apart from faith in Christ; no matter your ethnicity. And anyone can be saved by faith; no matter your ethnicity.