Why should we consider life insurance?

Insurance Read Time: 5 min

For many, insurance isn’t always top of mind, but it should be. Thinking about the reasons you might need insurance can be uncomfortable — it usually means something bad has happened. But why should we consider insurance in the first place? The answer is that insurance can provide you or your family with money for an unexpected event. More than that, it can also help to protect you and your loved ones from the unknown.

Insurance provides financial confidence

If you’ve ever worried about getting sick or being in an accident, having insurance coverage can help focus your thoughts and time on the things that really matter. Giving you the confidence and reassurance you need, especially when dealing with the unexpected.

Insurance helps protect your lifestyle

The simple truth is that even if you’re happy, healthy, and living your best life, unpleasant things can happen. And if you have a family that depends on you, there’s a lot you don’t want to leave to chance. Good or bad, major events are one of life’s few consistencies. The unexpected can—and does—happen to everyone, and many, like getting too sick to work, can be very expensive if you aren’t prepared.

5 Key questions to ask yourself about insurance

If you pass away or get too sick or injured to work, how will your family cover expenses without your income?
Do you have the means to provide for your family if you become too sick or injured to work?
Does your family have the financial resources to maintain their lifestyle, such as your home and education costs?
Will you leave behind any debts they’ll have to take on?
Do you have access to cash that could potentially be leveraged in emergencies?

Two types of insurance to consider to protect yourself and your loved ones

Fortunately, these important issues can be resolved by taking a “protection-first” approach to your income. Beyond paying for immediate needs should you get sick, become disabled, or pass away, some insurance can also help support you with living benefits. These policies give you access to built-in cash value that can help cover emergencies, or help fund educational expenses, or even help supplement your retirement income.1,2 There are two major types of insurance that can help you protect your income and loved ones: life insurance and disability insurance.

Why should we consider Life Insurance?

Life insurance helps protect you by providing an income tax-free death benefit to your loved ones after you pass away. Some types of life insurance also accumulate a cash value that allows you to pay for larger expenses without tapping into your savings or retirement accounts.

Whole Life Insurance

There are two main types of life insurance: term life insurance and whole life insurance. As its name indicates, whole life insurance provides coverage for your whole life³, and provides features like cash value that can help you protect your family, pay for education, and supplement your retirement income — all things that our research has found to be among the top life priorities of working Americans.

Term Life Insurance

Characterized by lower premiums and coverage that lasts for a specified amount of time—like 10, 20, or 30 years—term life insurance can be more cost-effective protection if you aren’t ready to commit to whole life insurance yet. On some term life products, riders may be available, such as the ability to donate an extra 1 percent of the death benefit—over and above the amount paid to the designated beneficiaries—to any qualified 501(c) (3) charity of the policy owner’s choosing.4

How do you choose Life Insurance?

While you may be wondering which type of life insurance is right for you, the good news is that many types of term life insurance policies can potentially be converted to whole life insurance if and when it makes sense to do so. As you explore the options, check-in with a financial professional to help you determine which type of coverage is right for you based on your situation.

How much insurance coverage should I consider?

Determining the right amount of coverage for yourself typically depends on certain factors, including your current debt, potential earning power, net worth, and who depends on you. The goal of life insurance is to protect your potential earnings over time. Think of it this way: if you’re the breadwinner of your family and you have dependents, it’s critical that you’re prepared to provide income in the event you get sick, become injured, or pass away.

Why do we consider Disability Insurance?

Disability insurance, also called income protection, helps protect you and your loved ones if you become too sick or injured to work. It replaces a portion of your income until you can return to work and can help prevent you from spending your savings or accruing debt.

The types of Disability Insurance

There are two major types of disability insurance: short-term and long term. Short term disability insurance helps replace a portion of your income immediately after an accident or illness. Long-term disability insurance takes effect after short-term insurance runs out and helps protect you in the event of long-term injuries or illnesses. Supplemental disability insurance is a third type, which can be used to add extra coverage to a short- or long-term policy.

Workplace Disability Insurance

Many employers provide disability insurance to their workers. However, workplace disability insurance often only covers 40–60 percent of your income. Many people want additional coverage through an additional individual policy or supplemental policy.

When should I start thinking about obtaining insurance?

In general, the younger you are when you purchase insurance, the less expensive it may be—especially if you’re in good health. If you want the protection and comfort that insurance can bring you, there’s no better time to consider purchasing than now.

Insurance offers you protection and confidence

While things like life insurance can feel complex, preparing for life’s major needs—through planning for protection or saving for retirement—are some of the best ways to help set yourself and your family up for a better future. This can help to ensure that when something bad happens, like a job loss, disability, or death, you and your loved ones can have the resources needed to continue with your lives with fewer disruptions and less financial impact.

SOURCES:

¹ 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 representative and refer to your individual whole life policy illustration for more Information.
² 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.
³ 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.
⁴ Riders may incur an additional cost or premium. Riders may not be available in all states. The Charitable Benefit rider is available on Guardian Level Term policies. Up to a maximum of $100,000. Subject to state availability. Guardian Level Term is issued by The Guardian Insurance & Annuity Company, Inc. (GIAC), a Delaware corporation whose principal place of business is 10 Hudson Yards, New York, NY 10001. 1 888 GUARDIAN (1 888 482 7342). Policy form numbers: GLT 10, 15, 20, 30: 20-GLT Charitable Benefit Rider: 20-CBR GIAC

DISCLAIMERS:

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.

Individual disability income products underwritten and issued by Berkshire Life Insurance Company of America (BLICOA), Pittsfield, MA or provided by Guardian. BLICOA is a wholly owned stock subsidiary of and administrator for the Guardian Life Insurance Company of America (Guardian), New York, NY. Product provisions and availability may vary by state.

Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice.

2024-179215 Exp. 8/2026

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