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Life Insurance Overview

Life Insurance Overview

| February 06, 2023

Life insurance is a contract between an individual and an insurance company that provides financial coverage to the policyholder's beneficiaries in the event of their death. This coverage can provide a safety net for loved ones who are financially dependent on the policyholder and can help ensure their financial stability in the event of a tragedy.

There are two main types of life insurance: term life insurance and whole life insurance.

Term life insurance provides coverage for a specified period of time, typically 10, 20, or 30 years. It is the most affordable type of life insurance, as the premiums are lower than those of whole life insurance. However, once the term is over, the coverage ends and the policyholder must either renew their coverage or purchase a new policy if they want to continue having life insurance.

Whole life insurance, also known as permanent life insurance, provides coverage for the policyholder's entire lifetime. This type of life insurance is more expensive than term life insurance, but may also accumulates a cash value over time that the policyholder can access through loans or withdrawals1.

When choosing a life insurance policy, it's important to consider the policyholder's age, health, and financial situation. A younger, healthier person will typically have lower premiums, while an older or less healthy person may pay more. The policyholder should also consider the amount of coverage they need and the length of time they want their coverage to last.

Additionally, there are several riders that can be added to a life insurance policy to enhance coverage. For example, a policyholder may choose to add a disability rider, which would provide coverage in the event that they become disabled and unable to work.

Life insurance is an important consideration for anyone who wants to provide financial security for their loved ones in the event of their death. Whether you choose term life insurance or whole life insurance, be sure to consider your individual needs and budget, and talk to an insurance professional to find the policy that's right for you.

1Any loans or withdrawals reduce the policy’s death benefits and cash values and affect the policy’s dividend and guarantees. 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. Whole life insurance should be considered for its long-term value. Early cash value accumulation and early payment of dividends depend upon policy type and/or policy design, and cash value accumulation is offset by insurance and company expenses. Consult with your Guardian representative and refer to your whole life insurance illustration for more information about your particular whole life insurance policy.