Whole Life Insurance Pros and Cons | Guardian

This article is for informational purposes only. guardian may not offer all products discussed. consult with a financial professional to understand what life insurance products are available for sale.

1 All permanent life insurance policy warranties are subject to timely payment of all required premiums and the claim-paying ability of the issuing insurance company. Policy loans and withdrawals affect collateral by reducing the policy’s death benefit and cash values.

Reading: Why buy whole life insurance

2 Some whole life policies have no cash values ​​in the first two policy years and do not pay dividends until the third policy year. talk to your financial representative and refer to your individual whole life policy illustration for more information.

See also: What are some items typically excluded from property insurance

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 dividends are not guaranteed. they are declared annually by the guardian’s board of directors.

5 There are two types of permanent life insurance: 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 on a universal life policy through interest credited and lower insurance costs. The cash value of both policy types benefits when the policyholder pays more than the required premium.

6 Universal life insurance can lapse prematurely due to inadequate funding (low or no premium), increased cost of insurance rates as the insured ages, and a low credit interest rate. this does not apply to universal life policies that have a secondary guarantee, but if the secondary guarantee requirements are not met, the policy will most likely lapse.

See also: How much is FHV insurance in New York City and how do I buy it? – Inshur

7 an indexed universal life (iul) policy is not considered a value. premium and death benefit rates are flexible. your accreditation rate is based on the performance of a stock market index with a maximum rate (ie 10%), a floor (ie 0%) and a participation rate (ie 100%). this type of universal life policy can lapse due to poor or negative stock market performance, inadequate financing, and increased cost of insurance rates

the s&p 500 index is a market index that is generally considered representative of the stock market as a whole. the index focuses on the large cap segment of the us. uu. stock market indices are not managed and you cannot invest directly in an index. Past performance is not a guarantee of future results.

8 A variable universal life (vul) policy is considered both life insurance and a security and is sold with a prospectus. premium and death benefit rates are flexible. your credit rate is based on the performance of the underlying investment options provided in the policy. there is no guaranteed interest rate. This type of policy can lapse due to poor or negative performance of the underlying investment options, inadequate financing, and increased cost of insurance rates. see your policy prospectus for more information

9 Policy benefits are reduced by any outstanding loans or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and interest on loans. withdrawals above the cost basis may generate taxable revenue. If the policy expires or is surrendered, any outstanding loans that are considered gains on the policy may be subject to ordinary income taxes. If the policy is a modified endowment contract (MEC), the loans are treated as withdrawals, but first as earnings, subject to ordinary income taxes. If the policyholder is under age 59½, any taxable withdrawal may also be subject to a 10% federal tax penalty.

See also: Who Pays Lenders Title Insurance – Mathis Title Company