Term Life Insurance Calculator

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What affects the cost of a policy?

It's more about what you want in a policy and less about the company you get it from.

Type of policy: permanent policies typically cost more than term 

All life insurers issue policies that pay death benefits to your loved ones. But policies don't all work – or cost – the same: Term policies provide lower-cost temporary protection, while permanent policies can provide life-long protection with wealth-building benefits: 

Term life insurance

This form of protection lasts for a limited time, typically 10, 15, 20, or 30 years. Most term policies feature "level" premiums, but with some, rates may periodically increase, for example, at 5-year intervals. It's can be easy to get a quote and buy term life, and it can also be more affordable than a permanent whole or universal life insurance policy. 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.

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Whole life insurance

This is permanent life insurance 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 or even cash to help in retirement. Whole policies don't expire as long as your regular premiums are paid. A mutual life insurance company (such as Guardian) may also provide dividends, helping you fund life's other financial opportunities.2,3,4,10

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Universal life insurance

Like whole life coverage, 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 circumstances.5 

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    Coverage amount: the more you get, higher are your rates

    Term life insurance tends to be affordable, in the sense that you can get a given benefit amount typically for less than it would cost with a permanent policy. Still, for any given type of policy from any company, a higher death benefit will cost more than a lower death benefit. 

    How much do you actually need? 

    That's an entirely personal decision, based on where you are in life and how many people rely on your income. However, there are several ways to get an estimate. Our life insurance calculator uses the "Human Life Value" method, which looks at what you're earning now plus what you expect to earn in the future. (That's why it has permission to ask about your earnings.) Between the ages of 18 and 40, it multiplies current income by about 30; as you get older and have fewer working years left, that multiple decreases.6 You'll also find reference to other rules of thumb to estimate your needs, including:

    Consider multiplying your income by 10
    Take your annual salary, add a "0" at the end, and there's your amount. $50,000 salary equals $500,000 of coverage, $75,000 equals $750,000, and so on. While this estimation method is very simple, it doesn't consider your true expenses and needs. That leads us to the next formula, which is just a bit more complex.

    Consider multiplying your income by 10 – and add college for each child
    This approach gives you the added reassurance of knowing your children may have more opportunities. How much should you add? Account for somewhere between $100,000 and $150,000 per child. If you split the difference – and have two kids – that's an extra $250,000.

    Consider the DIME formula
    DIME stands for Debt, Income, Mortgage, and Education. With this estimation method, your life insurance need is the sum of all those financial obligations: 

    • Debt: Total all your debts other than your mortgage, and add about $7,000 for funeral expenses.
    • Income: Take your salary and multiply by the number of years you think your family needs protection – or at least as long as you have children at home. 
    • Mortgage: Look at your last statement and get the payoff amount. If you have a 2nd mortgage or HELOC (Home Equity Line of Credit), add that in too.
    • Education: The anticipated cost for sending each of your children to college: between $100,000 and $150,000 per child.

    Life expectancy: the insurance company has to assess your risk

    One basic rule of life insurance is that it gets more expensive with age. That's because life expectancy goes down – a key factor used to determine rates. There's less risk to insuring a younger, more physically fit person because they are less likely to die in a given time frame – be it months, years or decades – compared to an older, less healthy person.

    That's more than just common sense: It's a fact proven by actuarial science, the discipline that applies mathematical and statistical methods to assess risk in insurance and other industries. When you apply for a policy, there's an application and underwriting process:  Insurers gather your information, consider your age, and evaluate your health with questions and, typically, a medical exam which includes blood work to check cholesterol levels and so on.

    Other items are also taken into account, including lifestyle and gender: Risky habits and dangerous hobbies (e.g., tobacco use, scuba diving) can make a life insurance policy more costly. Conversely, women tend to live longer, so they generally enjoy lower rates. 

    The average annual life insurance premium per U.S. household is $993.7

    How much might you pay? Get an instant term life quote

    There are differences between life insurers. Here's what to look for

    All large, nationally known insurers may seem alike, but they aren't. Some are more financially sound than others. Some are easier to work with. Some are more likely to provide the specific features you need. But only a handful of providers can offer you all those advantages. How can you find an insurance company that does? There are objective metrics and factors you can use:

    • High Financial Strength Ratings
      Independent organizations rate the financial strength of insurers to ensure their ability to meet obligations11.  
       
    • High customer satisfaction scores
      Customer surveys and reviews can tell you how satisfied others are with a company's services. Many in the industry consider J.D. Power & Associates to be a reliable source of insurance satisfaction data because they conduct an annual customer satisfaction survey of more than 5,000 U.S. life insurance policyholders. In the 2019 J.D. Power survey, Guardian ranked "Better than most" .8   
       
    • Low customer complaints 
      National Association of Insurance Commissioners (NAIC) collects data about complaints with state regulators. According to a recent analysis by Nerd Wallet, Guardian Life has had significantly fewer complaints to state regulators than expected for a company of its size over the last three years.  
       
    • Product selection and customization
      Some providers focus on term insurance,  while others offer both term and permanent with various optional riders that tailor a policy to your needs12. For example, Guardian provides convertible term and permanent policies and even has options to help cover people with certain kinds of pre-existing conditions – such as certain cancers, heart disease, even HIV.
       
    • Policyholder dividends 
      Some insurers are owned "mutually" by their policyholders, who get dividend payments that may otherwise go to shareholders. For example, when you purchase a whole life policy from a mutual insurance company like Guardian, you may get paid a dividend on your policy's cash value portion, helping to build your cash value further.
       
    • Direct underwriting 
      Some providers issue their own policies, like Guardian. Others act as a middleman, which can add costs to your premiums and an additional layer if you decide to change your policy – or if your family needs to collect death benefits. 

    All large, nationally known insurers may seem alike, but they aren't. Some are more financially sound than others. Some are easier to work with. Some are more likely to provide the specific features you need. But only a handful of providers can offer you all those advantages. How can you find an insurance company that does? There are objective metrics and factors you can use:

    • High Financial Strength Ratings
      Independent organizations rate the financial strength of insurers to ensure their ability to meet obligations11.  
       
    • High customer satisfaction scores
      Customer surveys and reviews can tell you how satisfied others are with a company's services. Many in the industry consider J.D. Power & Associates to be a reliable source of insurance satisfaction data because they conduct an annual customer satisfaction survey of more than 5,000 U.S. life insurance policyholders. In the 2019 J.D. Power survey, Guardian ranked "Better than most" .8   
       
    • Low customer complaints 
      National Association of Insurance Commissioners (NAIC) collects data about complaints with state regulators. According to a recent analysis by NerdWallet, Guardian Life has had significantly fewer complaints to state regulators than expected for a company of its size over the last three years.  
       
    • Product selection and customization
      Some providers focus on term insurance,  while others offer both term and permanent with various optional riders that tailor a policy to your needs12. For example, Guardian provides convertible term and permanent policies and even has options to help cover people with certain kinds of pre-existing conditions – such as certain cancers, heart disease, even HIV.
       
    • Policyholder dividends 
      Some insurers are owned "mutually" by their policyholders, who get dividend payments that may otherwise go to shareholders. For example, when you purchase a whole life policy from a mutual insurance company like Guardian, you may get paid a dividend on your policy's cash value portion, helping to build your cash value further.
       
    • Direct underwriting 
      Some providers issue their own policies, like Guardian. Others act as a middleman, which can add costs to your premiums and an additional layer if you decide to change your policy – or if your family needs to collect death benefits. 

    How to buy life insurance

    Through your workplace

    One place to start is your workplace, as your employer may offer life insurance at lower group rates. If offered, think about enrolling. It's generally affordable and easy to buy. Your employer has done the work of finding a policy, and enrolling typically requires little more than signing a form. You may be able to obtain this coverage without taking a medical exam or providing medical records. However, the benefit amount offered may be limited, and you might want more protection to help provide financial confidence to your loved ones. Fortunately, other options are available.

    Online

    If you don't have workplace coverage – or you want to supplement it – it can be easy to shop for term life insurance quotes online. Many providers, including Guardian, make it simple to compare rates by giving you instant online quotes with tools that provide an outstanding user experience. On the other hand, if you're looking for a whole or universal policy that builds cash value, it's harder to find a permanent life insurance quote online. These types of policies can and should be tailored to your individual needs, so it's worth your while to talk things over with a financial professional. 

    Working with a financial professional

    If you're interested in coverage with a cash value component – or you're not sure what kind of protection is best for you – it's a good idea to work with a financial professional. He or she can provide information about the options that fit your immediate needs and long-term goals. If you have a financial professional you trust, ask them how much coverage and what type of life insurance policies to consider. Otherwise, Guardian can connect you with a financial representative who will listen to your needs, tell you about the best ways to meet those needs within your budget, then help you decide. 
     

    Get a term life insurance rate quote

    Frequently asked questions about life insurance

    How does a life insurance company make money?

    An insurer collects premiums – typically for many years before they have to pay out a benefit. During that time, they invest the money, and those investment earnings are their primary source of profits.

    How are life insurers rated?

    Insurance providers are highly regulated by the states, which strive to ensure their solvency so that they can pay their obligations to policyholders. Also, independent rating agencies such as A.M. Best, Standard & Poor's, and Moody's evaluate their financial positions and issue Financial Strength Ratings.

    Are there meaningful differences among the big national life insurers?

    The largest insurers are financially sound and can provide a range of permanent and term life products to fit most needs. Even so, some are more financially sound than others. Some have a reputation for providing better customer service. And others tend to have fewer customer complaints lodged against them, indicating that they are easier to work with and may provide a higher quality customer experience.

     What about insurers that offer "no health exam" policies? 

    Some insurers issue life insurance policies that don't require a medical exam or even health questions. These "guaranteed acceptance" policies tend to offer limited face amounts and cost much more per $1,000 of coverage than a medically underwritten policy. After all, the insurance company has to assume that applicants have issues with their health status. So while a guaranteed acceptance policy can be an option for seniors who want to cover their final expenses, it may not be a solution for younger, healthier wage-earners who want enough life insurance coverage to provide for a family.

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    Disclaimer

    References

    1.https://www.limra.com/en/newsroom/news-releases/2020/2020-insurance-barometer-study-reveals-a-significant-decline-in-life-insurance-ownership-over-the-past-decade/

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

    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 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), an increase in the 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. The Human Life Value method of estimating life insurance needs:

     Age

    Maximum Life Insurance

    18-40

    30 times income

    41-50

    20 times income

    51-60

    15 times income

    61-65

    10 times income

    66-70

    1-time net worth

    71-80

    1/2 times net worth

    81+

    case by case

     

    7.Sources: S&P Global Market Intelligence; Claritas Pop-Facts. Data based on ordinary premiums within the National Association of Insurance Commissioners regulatory statements. From https://www.nerdwallet.com/blog/insurance/average-life-insurance-rates/

    8 https://www.jdpower.com/business/press-releases/2019-us-life-insurance-study

    9https://www.nerdwallet.com/blog/insurance/guardian-life-insurance/

    10 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.

    11 Financial information concerning Guardian as of December 31, 2020, on a statutory basis: Admitted Assets= $68.1 Billion; Liabilities = $60.3 Billion (including $48.9 Billion of Reserves); and Surplus = $7.8 Billion.

    12 Riders may incur an additional cost or premium. Riders may not be available in all states.

     

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