Insurance 101
Unsure how insurance works or want to know more? You’ve come to the right place. From life insurance to disability income insurance, we’re here to help you better understand the basics.
In general, insurance can be a financial tool that helps to protect you and the people you care about if something unexpected happens, like an accident, injury, or illness. An insurance policy helps to limit your financial burden if a covered event were to happen.
Different types of insurance
The more you know about the basics of insurance — how it works, coverage types, how much you need — the more clarity you’ll have. You’ll make more educated choices about what’s best for you and your family.
Put simply, if you were to pass away, life insurance will help protect your loved ones financially. There are two primary types of life insurance — term or permanent. The most common is term life insurance, where the insurance protection lasts for a set period — typically 10 to 30 years.
The other type is permanent insurance, which includes whole life. Whole life insurance lasts for your entire life, provided you make premium payments. The policy has an extra component called cash value, that can build up a significant, tax-advantaged asset, money that can be used during your lifetime. You could borrow against it, withdraw some as cash, purchase more life insurance coverage or eventually use it for retirement, while staying protected for life.1, 2, 3
Disability insurance replaces a percentage of your regular income if you’re too sick or injured to work. It covers things like serious accidents and a variety of medical conditions, like heart disease, stroke, cancer, diabetes, lupus, and multiple sclerosis. It can also supplement short-term and long-term disability coverage that you may have through your employer. And employers can offer disability insurance that helps their employees get back to work sooner.
Dental insurance plans can help reduce the cost of dental care by using an in network provider. Providers typically negotiate lower fees with in-network dentists and pay (cover) a percentage of the reduced fee. You pay the rest out of pocket. Besides price, you may also consider a plan’s annual spending maximum, waiting period, and what procedures are covered (e.g., orthodontics, crowns, root canals).
Vision insurance provides coverage for routine eye exams, as well as offering discounts on eyeglasses and contacts. These benefits are not typically covered under major medical plans and are an elective part of your overall wellness checkups. Though often optional, access to quality vision care can be critical, as regular eye exams can detect diseases like glaucoma and diabetes.
Supplemental insurance helps pay for unexpected costs not covered by medical insurance, particularly medical benefits offered by an employer, and offsets the costs of high deductible health plans that may still leave people with high co-pays and deductibles. Supplemental insurance helps with this financial burden – helping to protect your savings.
It can include four primary supplemental health products. Accident insurance covers accidental injuries requiring treatment, urgent care, or hospitalization. Critical illness insurance provides a lump-sum benefit for the diagnosis of major, chronic and debilitating illnesses. Cancer insurance covers a cancer diagnosis or related procedures, treatments, or screenings. Hospital indemnity insurance provides benefits for a hospital or intensive care unit (ICU) for a covered sickness or injury.
From dental to vision, to life and disability insurance, employee benefits can help you feel more financially confident.
Talk to your employer for more information.
Talk to your broker about insurance options to offer your employees.
As a business owner, you can purchase different types of disability and life insurance policies that can safeguard your business and help protect your cash flow if you are unable to work.
We offer dental and vision directly.
For coverage like life, disability, retirement planning and investments, talk to a financial professional about which options will best fit your needs.
What impacts pricing? | There are also several factors that could affect the cost of your financial coverage. We’ll use life insurance as an example. Term life typically doesn’t cost as much as whole life insurance, but doesn’t offer the lifetime coverage or additional financial benefits. Age, health, gender, driving record, occupation, your health, and the amount your loved ones would receive all impact the pricing of life insurance. |
How much does life insurance cost? | You can get a quote on term life insurance with this tool. And how much coverage you need depends on many factors, such as how many dependents you have, how much you expect to earn, what lifestyle you hope your loved ones can experience, and more. A simple rule of thumb is that if you’re in your 20s, an ideal amount of coverage would be 30 times your income, and as you age, less may be required. In your 50s, you might need only 10 times your income. This is based on how many earning years before retirement you’re covering. |
What does disability insurance cost? | How much does it cost to help protect your income? Use this calculator to estimate the monthly cost of disability income insurance in less than one minute. |
How can I use HSAs to help pay for medical expenses? | If you have a high deductible health plan (HDHP) with a health savings account (HSA), use it to set aside money to help cover any out-of-pocket expenses. You can make pre-tax contributions into an HSA, which will help you save on taxes. |
1 Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.
2 Some whole life polices do not have cash values in the first two years of the policy and don’t pay a dividend until the policy’s third year. Talk to your financial professional and refer to your individual whole life policy illustration for more information
3 Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and loan interest. Withdrawals above the cost basis may result in taxable ordinary income. If the policy lapses, or is surrendered, any outstanding loans considered gain in the policy may be subject to ordinary income taxes. If the policy is a Modified Endowment Contract (MEC), loans are treated like withdrawals, but as gain first, subject to ordinary income taxes. If the policy owner is under 59 ½, any taxable withdrawal may also be subject to a 10% federal tax penalty.
4 IRS, Publication 969 (2023), Health Savings Accounts and Other Tax-Favored Health Plans, accessed March 2024
Dental, Vision, Accident, Critical Illness, Cancer and Hospital Insurance coverages are underwritten and issued by The Guardian Life Insurance Company of America, New York, NY. Products are not available in all states. Policy limitations and exclusions apply. Optional riders and/or features may incur additional costs. Plan documents are the final arbiter of coverage. Dental policy provides DENTAL insurance only. Vision policy provides vision care limited benefits health insurance only. Accident policy provides Accident insurance only. It does not provide basic hospital, basic medical or major medical insurance as defined by the New York State Department of Financial Services. IMPORTANT NOTICE –THIS POLICY DOES NOT PROVIDE COVERAGE FOR SICKNESS. Critical Illness and Cancer policy provides limited benefits health insurance only. Hospital policy provides limited hospital insurance only. Vision, Critical Illness, Cancer and Hospital policies do not provide basic hospital, basic medical or major medical insurance as defined by the New York State Department of Financial Services.
Individual insurance products are underwritten by The Guardian Life Insurance Company of America, New York, New York or by one of its wholly owned subsidiaries and sold directly to individuals by DTC GLIC, LLC. Products are not available in all states. Policy limitations and exclusions apply. The actual limitations and exclusions that apply to your Dental Plan are governed by the policy forms approved for use in your state.
Individual Vision insurance is provided by VSP and billing and premium collection services for such vision insurance are conducted by DTC GLIC, LLC (d/b/a DTC GLIC Insurance Sales, LLC in California). Guardian is not affiliated with VSP and Guardian does not assume any responsibility or liability for non-Guardian products or services, including those offered by VSP. DTC GLIC, LLC is a wholly owned subsidiary of Guardian.
Guardian® is a registered trademark of The Guardian Life Insurance Company of America. Copyright © 2024. The Guardian Life Insurance Company of America®, New York, NY