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Term Life Insurance

What is term life insurance?

Term life insurance is a simple product designed to provide a tax-free payment to the people you choose, known as your beneficiaries, upon your passing. These policies provide coverage for a set period of time, which means it could end while you’re still living. And it can be a great starting point for securing protection for your loved ones.

Term Life Insurance vs Whole Life Insurance

Term Life Insurance vs Whole Life Insurance

With term life insurance, the insurance protection lasts for a set period — typically 10 to 30 years. It is a more affordable option. Whole life insurance lasts for your whole life, provided you make premium payments. The policy has an extra component called cash value, that can build up a significant, tax-deferred asset, money that can be used during your lifetime.

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Types of Term Life Insurance

  • Level premiumAlso called level term; this is the simplest, most common type of policy: Your premium and death benefit stay the same for the entire term.

  • Yearly Renewable TermAlso called an annual renewable term. This policy covers you for a year at a time, with an option to renew without a medical exam for the duration of the term – but at a higher cost each year. Compared to a level term policy, your premiums will be slightly lower at first, but over a full 10, 20, or 30-year term you will pay more than you would with a level premium policy.

  • Return of Premium- This type of term policy actually pays back all or a portion of your premiums if you live to the end of the term. What’s the catch? Your premiums could be 2-4 times higher than with a level term policy. Also, if your financial status changes and you let the policy lapse you may only get a portion of your premiums returned – or nothing at all.

  • Guaranteed Issue- These policies are easier to get because they don’t require a medical exam and only ask a few simple health questions at most. This also means that the insurance company has to assume that you are a risky prospect who has health issues, so your premiums may be much higher than they otherwise would be. Also, the policy might not pay a full death benefit for the first few years of coverage. If you have health issues but are able to manage them, it will usually be worth your while to get a conventional term life policy that is underwritten (i.e., requires a medical exam).

Why Guardian's Level Term Life Insurance