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 The HLV Theory states that one should maintain life insurance equal to the present value of their expected future earnings. Life insurance companies place limits on life insurance available to consumers based upon this formula and have created age-based multiples of current income as a guideline. For example, a person in their 30s may be insured for around 30 times their annual income, 20 times for a person in their 40s, and 10 times for people in their 50s. Age 60 and over about 1 times net worth.
2 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.
3 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 professionaland refer to your individual whole life policy illustration for more information.
4 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.
5 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. 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.
FAQs
A joint policy typically costs less than having two individual policies. However, you will have less flexibility with a joint life insurance plan, and there could be coverage limitations if your spouse or partner has health issues.
Should couples get life insurance together? ›
It's common that one spouse handles getting life insurance for the family. However, both spouses should be included in the planning and discussions about coverage to create the peace of mind that is so important once the policy is in force. Compare policies.
How does joint life insurance pay out? ›
A joint-life payout is a payment structure for pensions, annuities, and retirement plans. This payout provides income to a second person (typically a spouse) after the account holder dies. The alternative to these agreements is a single-life payout for an individual.
How to answer life insurance questions? ›
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.
Who benefits from a joint life insurance policy? ›
What is a joint life insurance policy? It's a life insurance policy for two people – typically spouses or domestic partners – but it only pays a benefit when one of them dies. Some policies are term life insurance policies, but most are permanent whole life insurance or universal life insurance.
Is it better to have a joint life insurance policy? ›
A joint policy is generally cheaper than taking out two separate policies for the same level of cover. If you're on a tight budget, a joint policy may be more affordable. Think about whether the surviving partner would need to take out individual cover later in life.
How much life insurance should a couple have? ›
Most insurance companies say a reasonable amount for life insurance is at least 10 times the amount of annual salary. If you multiply an annual salary of $50,000 by 10, for instance, you'd opt for $500,000 in coverage. Some recommend adding an additional $100,000 in coverage per child above the 10x amount.
Does life insurance go to wife or beneficiary? ›
A primary beneficiary is the person (or persons) first in line to receive the death benefit from your life insurance policy — typically your spouse, children or other family members.
What is the face amount of a $50,000 graded death benefit? ›
For example, with a $50,000 graded death benefit policy, the initial face amount may be $10,000 in the first year, then increase to $20,000 in the second year, and so on, until it reaches the desired coverage amount of $50,000.
Is joint life cheaper than survivorship? ›
Advantages of joint life insurance for married couples
Since one survivorship universal life policy covers two people, it generally costs less than two separate policies.
Joint life comes in two varieties: first-to-die, which pays out to the surviving spouse after the first dies; and second-to-die, or survivorship, which pays a death benefit to the beneficiary after both spouses pass away.
What is the difference between joint life and dual life? ›
For Guaranteed Whole of Life Protection, Joint life cover insures two lives, but a claim can only be paid out on the death of one of the lives. You decide, at the outset, which life that is. Dual life cover also insures two lives, but a claim can be paid on the death of each life.
Can you cancel joint life insurance? ›
Contact your insurance provider if you want to cancel a joint life insurance policy. You don't always need your ex-partner's consent to do this, although you should let them know in case they want to arrange alternative life cover.
