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.
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.
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.
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.
- Cash value
Understanding dividends from whole life insurance
- What’s required to get approved?
- Waiver of Premium
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.
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.
- Is whole life insurance a good investment?
- Are whole life insurance premiums tax deductible?
- Is whole life insurance worth it?
- How to find the best whole life insurance policy
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.