Life Insurance Basics 2
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Life Insurance Basics 2

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Life Insurance Basics 2 Life Insurance Basics 2 Presentation Transcript

  • The Guardian Life Insurance Company of America 7 Hanover Square, New York, NY 10004 BASICS #2 LIFE INSURANCE
  • Types of Individual Life Insurance
  • Term Life Insurance
    • Nothing paid in event insured survives
    • period ( no cash or loan values ).
    • Face amount of policy paid in event of death .
    • Protection for a specified period .
    Types of Individual Life Insurance
            • Insured wants " pure" protection
            • and invest savings or investment
            • dollars elsewhere.
    • Need is permanent but insured
    • cannot afford premium for
    • permanent life insurance.
            • Need is temporary.
    • Used when :
    Term Life Insurance Types of Individual Life Insurance
      • Level Term -
      • Decreasing Term -
      • Yearly Renewal Term -
    Level Death Benefit ; premium increases annually. Death Benefit decreases over period of contract; level premium . Specified level amount of insurance and level premium for initial period of contract . May be renewable at end of initial period, usually at a higher premium. Term Life Insurance Types of Individual Life Insurance
  • Death Benefit 30 40 Premium Rates 10-Year Renewable* Term * Guardian’s “10+ Term” is level premium for 10 years (guaranteed level for 3 years), increasing to a higher level premium years 11-15. Death Benefit is level. It is convertible, not renewable. Convertible only in the first 5 years. 45
  • Death Benefit Payable Age 35 Age 45 Age 40 $50,000 10-Year Decreasing Term $50,000 $40,000 $30,000 $20,000 $10,000 $0
  • Age 35 Age 40 Yearly Renewable Term Automatically renews each year at a higher premium as long as premium payments are made. $50,000 Face Amount Premium Rates
    • Furnishes protection for one’s whole life .
    Whole Life Insurance
    • In one lump sum (premiums paid in advance)
    • Over a limited period (20 year, to age 65, life
    • expectancy)
      • Throughout insured's lifetime (ordinary or "straight"
      • life)
    • Premiums may be paid:
    Types of Individual Life Insurance
    • Has a saving or " cash value " component
    • The excess makes up the deficiency of premiums
    • in later years when annual premium is not
    • sufficient to pay annual cost of insurance. These
    • extra premiums are held by the insurer, creating
    • the "cash value" of the policy.
    • Early years of premium more than enough to
    • pay the current cost of insurance protection.
    Whole Life Insurance Types of Individual Life Insurance
  • $50,000 Policy Face Amount Whole Life (Non-Par) Guaranteed Cash Value By Contract* * Values are guaranteed by contract provision. Age: 35 65 45 55 75 85 95 100 Premium
  • $50,000 Policy Face Amount Whole Life (Participating) Dividends buy Paid-up Additional insurance Gtd. Cash Values Age: 35 65 45 55 75 85 95 100 Premium Cash Value Build-up from Dividends
  • Values of Whole Life With Different Payment Periods Death Benefit Cash Values 20-Pay L65 L100/L1000 These are “paid-up” policies (no further premium is due after the payment period). However cash value and death benefit continue to increase. Age: 35 65 45 55 75 85 95 100
  • Guardian Whole Life with Q Option $100,000 Policy Face Amount $50,000 Whole Life Portion $50,000 Term Portion Gtd. Cash Values Dividends buy Term portion with excess buying ADDNS. Each year as whole life portion increases from ADDNS, less term is needed. Paid up Additions from Dividends Age: 35 65 45 55 75 85 95 100 Premium
    • Same concept as whole life with:
    • Policy cash values and/or death benefits may
    • fluctuate based on performance of investments
    • in which policy values are placed.
    • Cash value component directed into select sub-
    • accounts (usually mutual fund-style accounts,
    • or money market accounts) by the policy owner.
    • A " floor" premium necessary to maintain death
    • benefit .
    Types of Individual Life Insurance
  • Variable Whole Life Insurance $100,000 Policy Face Amount Cash Value Build-up Minimum Premium to Guarantee Death Benefit Level or Increasing Death Benefit Guaranteed Death Benefit Types of Individual Life Insurance Age: 35 65 45 55 75 85 95 100
    • Flexible premium in concept .
    Universal Life Insurance
      • From which is taken cost of term insurance,
      • expenses, and riders.
    • Separates "pure" insurance protection
    • (term element) from the investment
    • element in the policy .
    • Cash value acts as fund:
    • To which is credited interest income on
    • the fund.
    Types of Individual Life Insurance
  • Level Death Benefit Corridor Universal Life Death Benefit Option 1 Pure Protection Accumulation Account Level Death Benefit (until Accumulation Account performance forces it up, to maintain a “corridor” of protection), flexible Premium with some constraints, no policy dividends paid.
  • Increasing Death Benefit Cash Value Pure Protection Universal Life Death Benefit Option 2 Increasing Death Benefit (based on Accumulation Account performance), flexible Premium with some constraints, no policy dividends paid.
    • Same concept as Universal Life but
    • investment element directed into select
    • sub-accounts by the policy owner .
    Variable Universal Life
    • Policy cash values and/or death benefits
    • may fluctuate based on performance of
    • investment in which policy values are
    • placed.
    Types of Individual Life Insurance
  • Variable Universal Life Death Benefit Pure Protection Accumulation Value is based on performance of sub-account Level Death Benefit, flexible Premium with some constraints, no policy dividends paid. Corridor
  • Next, See Important Features of Life Insurance in The Guardian Life Insurance Company of America 7 Hanover Square, New York, NY 10004 BASICS #3 LIFE INSURANCE