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 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.
2 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.
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 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
The answer is yes: You can have multiple life insurance policies, and some people choose to keep more than one policy to provide additional financial security in the event of an unexpected death.
Is it possible to have multiple life insurance policies? ›
In short, yes, you can have multiple life insurance policies, but insurers may limit the total amount of coverage you can buy. This is because life insurance is primarily designed to replace your income when you die, so you might need to justify a need for more coverage.
What not to say when applying for life insurance? ›
LYING ABOUT DRUG USE OR TOBACCO & ALCOHOL USE
An applicant for life insurance must disclose lifestyle habits, good and bad, including use of alcohol or use of tobacco.
What is the rule of thumb for life insurance? ›
Human Life Value*
Based on the value of your future earnings, a simple way to estimate this is to consider 30X your income between the ages of 18 and 40; 20X income for age 41-50; 15X income for age 51-60; and 10X income for age 61-65. After age 65, coverage is based on net worth instead of income.
Why do life insurance companies ask if you have other insurance? ›
Life insurance companies ask about other insurance policies to assess the overall risk they are undertaking when insuring an individual. Knowing about other policies helps insurers determine the policyholder's financial exposure and ensure that the coverage amount is appropriate.
Is there a limit to how many life insurance policies a person can have? ›
Insurability limits
There are no legal limits as to how many life insurance policies you can own. However, be certain that the benefits you are applying for are no more than what would be reasonable for a person with your expected income level and assets.
Can you have a combined life insurance policy? ›
A couple – married or otherwise – has another option: Instead of buying separate individual policies, they can buy joint life insurance. While joint policies aren't as popular as individual policies, this type of coverage can be an option to consider for people with certain types of needs.
What will disqualify you from term life insurance? ›
Due to the added risk health problems create for insurers, some pre-existing conditions can raise your premium or even disqualify you entirely from certain types of life insurance. A few common examples of pre-existing conditions include high blood pressure, diabetes, cancer, and asthma.
Who gets denied life insurance? ›
Medical conditions such as diabetes, high blood pressure or heart disease may disqualify you from coverage if your illness is life-threatening. If you've had cancer or are currently undergoing cancer treatment, your life insurance application may be denied until you've been in remission a certain number of years.
How long does it take to get approved for life insurance? ›
Typically, it takes four to eight weeks for traditionally underwritten policies to be approved and issued. For instant life insurance policies that use accelerated underwriting, it's possible for coverage to go into effect on the same day.
One common rule of thumb is to have life insurance coverage that is at least 10-15 times your annual income.
What is the 7 year rule for life insurance? ›
The 'seven-pay' test
The IRS uses the “seven-pay” test to determine whether to convert a life insurance policy into a MEC. If you put too much money into your policy in the first seven years, it becomes a modified endowment contract.
At what age do you no longer need life insurance? ›
At what age is life insurance no longer needed? Life insurance is no longer needed for many people once they reach their 60s or 70s. At this point they have retired, their kids have grown up, and they've paid off their mortgage and other debts.
What happens to life insurance if you never use it? ›
Generally, when term life insurance expires, the policy simply expires, and no action needs to be taken by the policyholder. A notice is sent by the insurance carrier that the policy is no longer in effect, the policyholder stops paying the premiums, and there is no longer any potential death benefit.
Can someone take out life insurance on me without me knowing? ›
A third party can't take out a life insurance policy on you without your knowledge and consent. The person must first notify you of their intentions, and obtain your formal agreement to the policy.
Can you have too much life insurance? ›
There's no limit to how many policies you can own, but it is still possible to apply for too much life insurance.
Can you borrow against life insurance? ›
You can borrow from permanent life insurance policies that build cash value. These would typically include whole life and universal life (UL) policies. You cannot borrow against a term policy since there is no cash value associated with it.
Can you insure your life twice? ›
There's no limit on the number of life insurance policies you can have, but insurance providers will look at your total cover amount.
Which is better, whole life or term? ›
The pros and cons of term and whole life insurance are clear: Term life insurance is simpler and more affordable but has an expiration date and doesn't include a cash value feature. Whole life insurance is more expensive and complex, but it provides lifelong coverage and builds cash value over time.
Can you have both term and whole life insurance? ›
Not only can you have both term and whole life insurance, but there are plenty of reasons to do this. Many individuals mix their plans to meet their needs, and you can even have multiple of each if you see fit. The main reasons that policyholders both types include: Lower rates for better coverage.
