This article is for informational purposes only. Guardian may not offer all products discussed. Please consult with a financial professional to understand what life insurance products are available for sale.
1 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. Policy loans and withdrawals affect the guarantees by reducing the policy’s death benefit and cash values.
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 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.
4 Permanent life insurance consists of two types: whole life and universal life. Cash value grows in a participating whole life policy through dividends, which are declared annually by the company's board of directors and are not guaranteed. Cash value grows in a universal life policy through credited interest and decreased insurance costs. The cash value of both policy types benefits when the policyholder pays an amount above the required premium.
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 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.
7 Riders may incur an additional cost or premium. Riders may not be available in all states.
8 A Waiver of Premium rider waives the obligation for the policyholder to pay further premiums should he or she become totally disabled continuously for at least six months. This rider will incur an additional cost. See policy contract for additional details and requirements.
9 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.
FAQs
Life insurance declaration page
- Personal information: Review your date of birth, name, and any other information for errors.
- Benefit amount: The amount to be paid upon your death.
- Policy type: Specifies if you have a term or permanent policy.
- Premium amount: How much you have to pay monthly or annually for coverage.
Medical history: Your life insurance application will ask about significant medical conditions you have or have experienced including chronic illnesses, past surgeries or other major medical treatments. Be as specific and detailed as possible about each situation, its duration and your ongoing or past treatment.
How do you read an insurance policy statement? ›
Review the complete document, double-checking any data about the insured, policyholder, and beneficiaries. Then pay special attention to things such as the policy owner's rights, the premiums section, and any exclusions that the insurer may have.
What is the simplest way to understand life insurance? ›
What Is Life Insurance? Life insurance is a contract between you and an insurance company. In exchange for your premium payments, the life insurance company will pay a lump sum known as a death benefit to your beneficiaries after your death, as long as your policy is in force.
How much cash is a $100 000 life insurance policy worth? ›
How much can you sell a $100,000 life insurance policy for? On average, you can expect to receive 20% of the policy's face value when you sell it, according to the Life Insurance Settlement Association (LISA). That means a $100,000 life insurance policy might sell for $20,000. However, this is only an average.
What do the numbers on your insurance policy mean? ›
The first number is how much bodily injury coverage you have per person, and the second number is how much bodily injury coverage you have per accident. The third number is your limit for property damage.
How does life insurance work for dummies? ›
Life insurance covers the insured person's life. So if you pass away while your policy is active, your beneficiaries can use the payout to cover whatever they choose — medical bills, funeral costs, education, loans, day-to-day costs, and even savings.
What not to say when applying for life insurance? ›
For example, applicants might lie about their age, income, weight, medical conditions, family medical history or occupation. It's also relatively common for applicants to lie about their alcohol or drug use.
What disqualifies life insurance payout? ›
The key reasons life insurance may not pay out include if the policy has expired, lapsed due to unpaid premiums, the insured was untruthful on the application, the insured died from illegal activities, suicide, homicide, or during the waiting period.
What is a policy summary in life insurance? ›
A policy summary is an abbreviated overview of the key aspects of a life insurance policy. This can include the premium amounts, coverage limitations, conditions, and other details.
The regulations provide that this value is derived by computing the difference between the policy's reserve value at the date of the last premium payment and the projected reserve value at the date of the next premium.
What is life insurance in one word answer? ›
Life Insurance can be defined as a contract between an insurance policy holder and an insurance company, where the insurer promises to pay a sum of money in exchange for a premium, upon the death of an insured person or after a set period.
How to use life insurance to build wealth? ›
So, here are a few ways to use life insurance as a wealth building tool.
- Cash Value Accumulation. Life insurance policies, such as Farm Bureau Insurance's whole life policy, often come with a cash value component. ...
- Tax Advantages. ...
- Estate Planning. ...
- Business Succession Planning. ...
- Charitable Giving.
Term life insurance tends to be much cheaper than whole life coverage because term policies do not have a cash value component and may expire without paying any benefits. Whole life insurance is a form of permanent life insurance that covers the person for their entire life rather than a fixed period of time.
What is the cash value of a $10 000 life insurance policy? ›
A $10,000 term life insurance policy has no cash value. However, a permanent life insurance policy might. Usually, the cash value steadily accumulates over the years, but the cash value of some policies can decrease if an investment performs poorly.
How do I know if my life insurance is term or whole? ›
Term coverage only protects you for a limited number of years, while whole life provides lifelong protection—as long as you keep up with the premium payments. Term life is just insurance, whereas whole life adds a cash value component that you can tap during your lifetime.
How do I know if my life insurance has cash value? ›
You will typically find it listed separately in your life insurance statements. The net cash value will generally be lower than your total accumulated cash value for the first several years of coverage, as it's reduced by fees and surrender charges.
