life insurance basics 2
DESCRIPTION
Policy TypesTRANSCRIPT
The Guardian Life Insurance Company of America 7 Hanover Square, New York, NY 10004
Types ofTypes of
Types ofTypes of
Nothing paid in event insured survivesNothing paid in event insured survives period (period (no cash or loan valuesno cash or loan values).).
Face amountFace amount of policy of policy paid in event of deathpaid in event of death..
Protection for a Protection for a specified periodspecified period..
Types ofTypes of
Insured wants "Insured wants "pure" protectionpure" protection and invest savings or investment and invest savings or investment dollars elsewhere.dollars elsewhere.
Need is permanent but insured Need is permanent but insured cannot afford premiumcannot afford premium for for permanent life insurance.permanent life insurance.
Need is Need is temporary.temporary.
UsedUsed whenwhen:
Level Term -Level Term -
Decreasing Term -Decreasing Term -
Yearly Renewal Term -Yearly Renewal Term - Level Death BenefitLevel Death Benefit; ; premium increasespremium increases annually.annually.
Death Benefit decreasesDeath Benefit decreases over period of over period of contract; contract; level premiumlevel premium..
Specified level amount of insurance and level Specified level amount of insurance and level premium for premium for initial period of contractinitial period of contract. . May be May be renewable renewable at end of initial period, at end of initial period, usuallyusually at a at a higher premium.higher premium.
Types ofTypes of
Death BenefitDeath Benefit
3030 4040
Premium RatesPremium Rates
* 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.
4545
Death Benefit Payable
Death Benefit Payable
Age 35Age 35 Age 45Age 45Age 40Age 40
$50,000$50,000
$40,000$40,000$30,000$30,000
$20,000$20,000$10,000$10,000
$0$0
$50,000 Face Amount$50,000 Face Amount
Age 35Age 35 Age 40Age 40
Automatically renews each year at a Automatically renews each year at a higher premium as long ashigher premium as long aspremium payments premium payments are made.are made.
Premium RatesPremium Rates
Furnishes Furnishes protection for one’s whole lifeprotection for one’s whole life..
In one lump sum (premiums paid in advance)In one lump sum (premiums paid in advance)
Over a limited period (20 year, to age 65, lifeOver a limited period (20 year, to age 65, life expectancy)expectancy)
Throughout insured's lifetime (ordinary or "straight" Throughout insured's lifetime (ordinary or "straight" life)life)
Premiums may be paid:Premiums may be paid:
Types ofTypes of
Has a saving or "Has a saving or "cash valuecash value" component " component
The The excess makes up the deficiency of premiumsexcess makes up the deficiency of premiums in later yearsin later years when annual premium is not when annual premium is not sufficient to pay annual cost of insurance. These sufficient to pay annual cost of insurance. These extra premiums are held by the insurer, creating extra premiums are held by the insurer, creating the "cash value" of the policy.the "cash value" of the policy.
Early years of Early years of premium more than enoughpremium more than enough to to pay the pay the current cost of insurancecurrent cost of insurance protection. protection.
Types ofTypes of
$50,000 Policy Face Amount$50,000 Policy Face Amount
Age: 35Age: 35 65654545 5555 7575 8585 9595 100100
PremiumGuaranteed C
ash
Guaranteed Cash
Value By C
ontract*
Value By C
ontract*
* Values are guaranteed by contract provision.
$50,000 Policy Face Amount$50,000 Policy Face Amount
Age: 35Age: 35 65654545 5555 7575 8585 9595 100100
Premium
Dividends buy Paid-up
Dividends buy Paid-up
Additional in
surance
Additional in
surance
Gtd. C
ash
Gtd. C
ash V
alues
Values
Cash Value Build-upCash Value Build-up
from Dividendsfrom Dividends
Values of Whole Life With Values of Whole Life With Different Payment PeriodsDifferent Payment Periods
Death BenefitDeath Benefit
Age: 35Age: 35 65654545 5555 7575 8585 9595 100100
Cash ValuesCash Values
20-Pay
20-Pay
L65L65
L100/L1000
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.
$100,000 Policy Face Amount$100,000 Policy Face Amount
Age: 35Age: 35 65654545 5555 7575 8585 9595 100100
$50,000 $50,000 Whole Life PortionWhole Life Portion
$50,000 $50,000 Term PortionTerm Portion
Gtd. CashGtd. Cash ValuesValues
Premium
Dividends buy Term portion Dividends buy Term portion with excess buying ADDNS. with excess buying ADDNS. Each year as whole life portion Each year as whole life portion increases from ADDNS, less increases from ADDNS, less term is needed.term is needed.
Paid up Additions Paid up Additions from Dividendsfrom Dividends
Same concept as whole life with:Same concept as whole life with:
Policy Policy cash valuescash values and/or and/or death benefitsdeath benefits may may fluctuatefluctuate based on performance of investments based on performance of investments in which policy values are placed.in which policy values are placed.
Cash valueCash value component component directeddirected into select sub- into select sub- accounts (usually mutual fund-style accounts, accounts (usually mutual fund-style accounts, or money market accounts) or money market accounts) by the policy owner.by the policy owner.
A "A "floor" premiumfloor" premium necessary necessary to maintain deathto maintain death benefitbenefit..
Types ofTypes of
Types ofTypes of
$100,000 Policy Face Amount$100,000 Policy Face Amount
Age: 35Age: 35 65654545 5555 7575 8585 9595 100100
CashCash Value Build-upValue Build-up
Minimum Premium to Guarantee Death Benefit
Level or Increasing Death BenefitLevel or Increasing Death Benefit
Guaranteed Death Benefit
Flexible premiumFlexible premium in concept in concept..
From which is taken From which is taken cost of term insurance, cost of term insurance, expenses, and riders.expenses, and riders.
SeparatesSeparates "pure" "pure" insuranceinsurance protection protection (term element) (term element) fromfrom the the investment investment element in the policyelement in the policy.
Cash value acts as fund:Cash value acts as fund:
To which is credited To which is credited interest incomeinterest income on on the fund.the fund.
Types ofTypes of
Level Death BenefitLevel Death BenefitCorridor
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 BenefitIncreasing Death Benefit
Cash Value
Pure Protection
Increasing Death Benefit (based on Accumulation Account performance), flexible Premium with some
constraints, no policy dividends paid.
Same concept as Universal Life but Same concept as Universal Life but investment element directedinvestment element directed into select into select sub-accounts sub-accounts by the policy ownerby the policy owner..
Policy Policy cash valuescash values and/or and/or death benefitsdeath benefits may fluctuatemay fluctuate based on performance of based on performance of investment in which policy values are investment in which policy values are placed.placed.
Types ofTypes of
Death BenefitDeath 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 Next, See Important Features of Life Insurance Features of Life Insurance
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The Guardian Life Insurance Company of America 7 Hanover Square, New York, NY 10004