What is a whole life insurance policy?

A Guardian whole life insurance policy covers you for your entire life, rather than a limited term as with term life insurance ⁠(which typically covers you for a period of 10, 20, or 30 years­⁠⁠). A portion of the money you pay for your whole life insurance premium contributes to the cash value⁠—a financial asset that is guaranteed to grow and is tax-deferred.3

What are the types?

There are 2 main types of permanent life insurance: traditional whole life insurance and universal life insurance. With a traditional whole life insurance policy, you’ll pay a fixed premium for the entire length of your policy, meaning your required premium payments will never go up. But if you need more flexibility, a universal life insurance policy allows you to adjust your monthly premium payments while continuing to accumulate cash value.

Is whole life better than term life ?

That depends on your age, your financial obligations as well as your personal circumstances. For someone close to retirement, a term life insurance may be the better value, but if you have many working years ahead of you, being able to accumulate a cash value with a whole life policy can help protect your family and your finances in more ways than one.

Learn more about how to choose between types of life insurance.

Whole life insurance benefits

Your whole life policy covers you indefinitely, so you’re protected for your entire life, as long as you continue to pay your required premium.

Do you need whole life insurance?

Working adults with dependents, whether children or aging parents, are the most likely to consider life insurance, but whole life insurance has benefits to offer people of all ages and circumstances.

Nick Carlson purchased his Guardian whole life insurance policy when he was 26 years old. Years later, he was able to use that policy to purchase a home with his new wife and plan for the future education of their newborn child.

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How does whole life insurance work?

Whole life insurance has three components:

  • Life insurance: pays out when you die
  • Cash value
  • Premiums: what you pay monthly or annually

Premiums are used by the insurance company to pay expenses such as the cost of administering the policy, paying out death benefits, and the cost of evaluating people who apply for insurance (called underwriting).

A percentage of the premium goes into a tax-deferred portion, which is called the cash value portion of your policy. The cash value earns interest and grows tax-deferred at a guaranteed rate.

Understanding dividends from whole life insurance

Here are some factors to consider when choosing a whole life insurance policy

How much coverage you need mostly depends on where you are in life and how many people depend on the income you earn. In general, the younger you are, the more coverage you’ll need to compensate for the years of potential wage-earning ahead of you. And the more people depend on you, the more coverage you’ll want to meet all their needs after you’ve passed away. 

How to buy whole life insurance?

Want to know which life insurance company is right for you?

When you’re looking for long-term financial protection, it’s important to choose providers and financial professionals you trust. Look for a life insurance company that shares your values and has the longevity to prove they’ll be there when you need them.  And when you’re looking for a whole life insurance company, consider how the dividends offered by a mutual insurance company like Guardian can contribute to your financial confidence5.

Choosing a whole life insurance company is best left to research and consultation with an experienced financial representative. We suggest working with an experienced financial professional to assess your unique situation.

Get started

Connect with a local financial professional who can help you decide.

Frequently asked questions

The growth of the cash value in your whole life policy is guaranteed6 and doesn’t depend on financial market performance, giving you invaluable financial confidence.

Disclaimer

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

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

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 Guardian’s Board of Directors.

5

Financial information concerning Guardian as of December 31, 2018, on a statutory basis: Admitted Assets = $58.5 Billion; Liabilities = $51.3 Billion (including $44.3 Billion of Reserves); and Surplus = $7.2 Billion)

6

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 professional and refer to your individual whole life policy illustration for more information.

7

As long as your policy is not a Modified Endowment Contract.

8

Whole life riders may incur either an additional premium or cost. Riders may not be available in all states.

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