What are the three types of life insurance?

Term life insurance

This coverage lasts for a limited time, typically 10, 15, 20, or 30 years. It's very easy to get a quote and buy term coverage, and it's also typically more affordable than permanent whole or universal life insurance. However, when your term ends, you're no longer protected – you either have to apply for a new policy at a higher cost (because you're older) or go without. However, many term policies (such as those from Guardian) may let you transition to a permanent policy in the future. You may also be able to get a policy through your employer at a lower group rate.

Whole life insurance

This is permanent life insurance coverage that can provide guaranteed protection for the rest of your life while earning additional cash value that can be used for things like policy loans.1 Whole life policies don't expire as long as your regular premiums are paid. Policies from a mutual life insurance company (such as Guardian) may also provide dividends, helping you fund life's other financial opportunities.2,3,4

Universal life insurance

Like whole life insurance, this type of policy provides permanent protection and can earn additional cash value. However, universal life insurance can give the added flexibility of adjusting your monthly payments within a specific range to help you better deal with changing work circumstances.5 

Why you need to consider life insurance

Life insurance is an important part of your financial wellness, regardless of your family status. Here are types of coverage to consider for what's important to you:

How to buy life insurance

Disclaimer

1 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.

2 All whole life insurance policy guarantees are subject to the timely payment of all required premiums and the claims-paying ability of the issuing insurance company.

3 Dividends are not guaranteed. They are declared annually by Guardian's Board of Directors. The total dividend calculation includes mortality experience and expense management as well as investment results.

4 Some whole life policies 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 representative and refer to your individual whole life policy illustration for more information.

5 Universal Life Insurance may lapse prematurely due to inadequate funding (low or no premium), increase in cost of insurance rates as the insured grows older, and a low interest crediting rate. This does not apply to universal life policies which have a secondary guarantee, but if the secondary guarantee requirements are not met, the policy will most likely lapse.

6 "Funeral Costs: How Much Does an Average Funeral Cost?" Parting, September 14, 2019

7Deceased Taxpayers – Understanding the General Duties as an Estate Administrator" IRS, July 16, 2019 

Guardian® is a registered trademark of The Guardian Life Insurance Company of America, New York, NY.

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