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Life insurance

What is life insurance? First and foremost, it’s a way to protect your family and those who depend on you for financial support. It can provide a large, income tax-free payout to help them carry on if you pass away unexpectedly — and some policies have features that can help build family assets.¹

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What are the three main types of life insurance?

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Over 160 years of protecting what matters

Why so many generations of Americans have relied on Guardian life insurance

Guardian has been protecting people with life insurance for over 160 years. With high scores for financial soundness from independent rating agencies, our 12 million customers can trust us to be there when they need us most.⁸ We have a five-star rating from NerdWallet, and have been named one of the best life insurance companies by CNBC and U.S. News.⁹ And as a mutual insurance company, we’re actually owned by our policyholders, so we can put their interests first without answering to outside shareholders.

  • Who is life insurance for?

    If you have loved ones who depend on you for support — financial or otherwise — buying life insurance is one of the best ways to help ensure they’re provided for. Life insurance can also help people in other situations, like high net-worth individuals looking to transfer assets more easily without incurring added estate taxes.10

  • What does life insurance cover?

    It’s insurance that provides a death benefit if the policyholder passes away while the policy is in effect. Life insurance benefits are almost always paid out as an income tax-free lump sum and can be quite significant — enough to replace several years of lost income.

  • Why should I consider life insurance?

    Even if you don’t have dependents, life insurance is an important part of your financial wellness. Life insurance can do more than provide income replacement for your dependents — it can be used to help build tax-advantaged family assets, help assure the continuity of your business if you pass away, or even pay for final expenses.

When do people get life insurance?

There’s no time like the present — the younger you are, the more affordable your premiums and the more life insurance options you'll have. But a lot of people wait until a significant life event to get coverage. Three of the biggest include:

  1. Getting married

  2. Expecting a baby

  3. Buying a new home

 

Other common reasons for getting life insurance are:

  1. Taking on the role of a caregiver for a spouse, child, or aging parents

  2. Finding employment as a gig worker

  3. Becoming self-employed or starting a small business

FAQ

Top questions about life insurance

According to NerdWallet, a life insurance policy in April 2023 could range from $27 to $65 a month for a 40-year-old male buying a 20-year term policy with a $500,000 death benefit, which is a common type of policy.10 But it’s important to remember that when you get a quote, the rate is affected by many variables, including the life insurance company, policy type, coverage amount, length of term, gender, health status, and other factors. For example, a permanent whole or universal life insurance policy will cost significantly more, because it provides lifelong protection and builds tax-advantaged cash value that can be accessed while you are still alive.

A life insurance policy can help provide financial protection at any age, and it is especially important for adults with financial dependents. Consider getting life insurance sooner rather than later, because, generally speaking, the younger and healthier you are when you purchase life insurance, the lower your rates will be. As you age and your financial picture changes, life insurance can provide additional benefits. For example, permanent life policies are often used for estate planning to help simplify the transfer of generational assets. There can be certain tax benefits as well, but you should always consult with a tax professional before purchasing life insurance for this purpose.

Yes, many people have life insurance coverage from more than one source. For example, if you have group life insurance coverage through work, the coverage amount may not meet your life insurance needs, so you can supplement it with an individual policy. Or perhaps you have permanent insurance that provides lifetime coverage while building cash value but has a limited death benefit for your family. You can choose to get an additional term life insurance policy that can help provide a significant income tax-free death benefit while your children are still growing up.

Life insurance death benefits are almost always income tax-free. The cash value growth of a universal or whole life insurance policy is also tax-deferred, so it can grow faster because it's not being reduced by taxes each year.

The best policy for you depends on your needs and budget. If you're looking for lifelong insurance protection that also provides cash value, there are two main options: whole life and universal life. A whole life policy offers level premiums and more guarantees, but a universal life policy can be more affordable because it offers variable premiums that you can raise or lower within a certain range. The insurance company may also let you customize your policy with various provisions, such as an accelerated death (or “life”) benefit rider to pay for end-of-life needs and even certain kinds of long-term care. If you don't need permanent coverage or cash value, which can provide benefits such as policy loans, term life insurance coverage costs will generally be lower.

If you have loved ones who depend on you for income, life insurance is one of the best ways to help provide for their financial needs if you die unexpectedly. Life insurance companies also have specialized kinds of policies for customers with varying incomes and other needs, such as high-net-worth individuals looking to transfer assets more easily without incurring added estate taxes (you should always consult with a professional for tax advice first). On the other hand, if you have no financial dependents or heirs that you wish to provide for, then life insurance may not be a priority, although you can leave your life insurance to a cause you care about.

How much do you need? Get an estimate.

How much coverage you need depends mostly on where you are in life and how many people rely on your income. Our quote tool can give you a quick estimate based on certain assumptions related to your age and income.¹¹ In general, the younger you are, the more coverage you'll need to compensate for the years of potential wage-earning ahead of you. And the more people depend on you, the more coverage you may want for income replacement if you die. However, you don't have to factor in taxes: almost all life insurance benefits are paid out as an income tax-free lump sum.

There are also other ways to evaluate your needs. Find out more about how to estimate your life insurance need, or speak with one of our financial professionals for a more personalized analysis of your needs. He or she can also tell you about how different types of insurance can provide added financial protection.

Everyone’s coverage is unique. Your quote will be based on information you provide, but you can adjust the term length and coverage amount to fit your goals.

Three ways to get life insurance coverage

  • At work - Coworkers in a meeting

    At work

    A good place to start is your workplace. Your employer may offer life insurance at lower group rates. If offered as an employee benefit, it’s an easy decision: rates are generally budget-friendly and it’s simple to buy — enrolling typically requires little more than signing a form. You may not even have to take a medical exam or provide medical records. However, the coverage 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.

Need more information?

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Other products you may be interested in

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.

1,10 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 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.

3 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.

4 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.

5 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.

6 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.

7 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.

8 https://www.guardianlife.com/about-guardian

9 CNBC, Here are the 6 best life insurance companies of 2023, 2023

Nerdwallet, Guardian Life Insurance Review, 2023, 2023

U.S. News, Guardian Life Insurance Review, 2023

10 Nerdwallet, Average Life Insurance Rates, Accessed March 2023

11 Calculator relies on the Human Life Value estimation method. It's a relatively simple way of looking at your needs based on what you're earning now and what you expect to earn in the future, according to the following chart.

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 times net worth

71-80

1/2 times net worth

81+

case by case

You can adjust the coverage amount in the quote tool to see how it affects your quote.

12 Annuity guarantees are backed by the claims-paying ability of the issuing insurance company.