Insurance

Types of Life Insurance Explained | Guardian

term life insurance

A term life policy is exactly what its name implies: coverage for a specific term or period of time, usually between 10 and 30 years. It is sometimes called “pure life insurance” because, unlike whole life insurance, the policy has no cash value. it is designed solely to give your beneficiaries a payment if you die during the term.

Most individual term policies have level premiums, so you pay the same amount each month. when the term expires, there is no more coverage; Either you have to do without it or get a new policy, which will likely cost more: the older you are, the more expensive it will be to get a policy. however, many providers, including Guardian, will allow you to convert a term policy to permanent life insurance for part or all of the coverage period. If you get term life insurance through an employer, rates are generally issued “at age,” meaning rates will increase over time.

Reading: What type of life insurance builds cash value

This calculator can help you determine the cost of term life insurance at the level of coverage you want. How many years will your family need financial protection? For most people, it’s until the kids are grown, the house is paid for, and there is some money that can serve as a safety net for the surviving spouse.

whole life insurance

A whole life policy is the simplest form of permanent life insurance, providing coverage that lasts your entire life. Like other permanent policies, it includes a cash value component: a portion of your premium money is placed in a cash value account, and this sum grows over time on a tax-deferred basis, so you don’t pay taxes on it. the earnings. 3

Compared to other forms of permanent coverage, a whole life policy has three defining characteristics:

  • tier bonus remains the same for life
  • the death benefit is guaranteed as long as the guaranteed premiums are paid4
  • the policy includes guaranteed cash values ​​that grow at a guaranteed rate
  • See also: 8 smart steps for buying life insurance | III

    Cash value provides several significant benefits that you can use while you’re still alive. it takes a few years to turn into a useful amount, but once that happens, you can borrow money against it, use it to help pay your premiums, or even trade it for cash to live on in retirement.5

    When you get a whole life policy from a mutual company, as a guardian, its cash value can also earn annual dividends6. You get a portion of the insurer’s profits, which can be used to increase the value of your policy and provide other benefits. Although not guaranteed, Guardian has paid dividends to its qualified whole life policyholders every year since 1868.

    whole life vs. term life insurance

    Key differences between term life insurance and life insurance include:

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