A whole life insurance policy offers three key benefits: lifelong coverage with a death benefit guaranteed to be paid to your beneficiaries; a cash value component to help you build tax-deferred wealth; and level premiums guaranteed not to increase as long as you keep the policy in force.1,2
How does whole life insurance work?
All life insurance can help protect your family’s financial well-being. However, many people may prefer whole life insurance to more cost-effective term life insurance, which only covers you for a limited period. Why?
Whole life insurance policies offer permanent life insurance protection with coverage that lasts for the policyholder’s entire life, as long as the premiums are paid and the policy is active. Premiums are guaranteed to remain the same and never go up. Or, if they are still living at a specific “maturity” age (typically between 100 and 121 years old) the policyholder can choose from a variety of useful payout options, according to the provisions of their policy. More importantly, whole life insurance policies have a "cash value" component — a lifelong financial asset that grows at a set rate on a tax-deferred basis — so you don’t have to pay taxes on gains every year, allowing funds to grow more quickly.
Lifelong protection
The full death benefit is likely payable from day one — and coverage never expires as long as premiums are paid.
Cash value that grows
It’s a wealth-building asset you can access during your lifetime for education, retirement, and more.3
Dividends can add value
As a mutual insurance company, Guardian may pay annual dividends that can increase a policy's value.4,5
The cost never goes up
Whole life insurance premiums are fixed, so your policy payments will never increase.
Unique tax benefits
The cash value growth is tax-deferred, so you don't have to pay taxes on it every year. And, the death benefit is paid income tax-free to your beneficiaries.
Payment flexibility
You can choose to make continuing payments or pay premiums for a set period of time (often 10 or 20 years) and be fully paid.
It's also important to know that mutual insurance companies like Guardian are actually owned by their policyholders. So we focus on answering to them, not outside shareholders and Guardian directly underwrites its whole life policies.
What are the disadvantages of whole life insurance?
Like all other financial products, there are advantages and potential disadvantages to getting whole life insurance. For example, the premiums are higher than a term life insurance policy with the same death benefit amount. This is the case partly because term life policies doesn’t build cash value. And it’s also due to the fact that term life coverage is temporary, so the vast majority of policies never pay a death benefit: the term expires, or the policy is allowed to lapse before the insured policyholder dies. By contrast, with whole life insurance, coverage is permanent, and the death benefit is guaranteed to be paid out as long as the premiums are paid, and the policy is active.
The fixed premiums of a whole life policy — while predictable — can also be a disadvantage for people with variable incomes: in years when earnings are down, they may find it hard to keep up policy payments. The payment flexibility of a universal life insurance policy may be a more attractive option for them: premiums can be adjusted up or down within a specific range.6
Coverage amount
How much life insurance coverage you need mostly depends on where you are in life. In general, the younger you are, the more you may need to replace added years of lost income for your loved ones. And the more people depend on you for support, the more coverage you may want to consider.
Policy options
Riders are optional provisions that can provide added protection at an additional cost. Common types of riders offered may include:
Disability waiver of premium rider, which pays your premiums when you are unable to do so due to a qualifying disability.7,8
Long Term Care rider: a rider that accelerates the death benefit for Long Term Care.
The approval process
Your financial professional will review your personal situation and potential coverage options with you and then help you apply for a policy. As part of the underwriting process, you'll submit details about your medical history, finances, primary care physician, and beneficiaries. You can typically expect to have a medical exam as part of the approval process.
Connect with a local financial professional to get a quote.
Features: | Whole life | Term life |
Income-tax-free death benefit | ✓ | ✓ |
Lifelong protection | ✓ |
|
Cash value | ✓ |
|
Policy loans | ✓ |
|
May pay dividends | ✓ |
|
Premiums never increase | ✓ | ✓* |
Cost efficient coverage |
| ✓ |
* Premiums never increase during the term period; however in an annual renewable term policy (which provides coverage in 1-year increments) premiums can increase with every yearly renewal.
Learn more about how to choose between types of life insurance
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Financial strength
As one of the most highly rated companies in the industry, Guardian has strong scores for financial soundness from independent rating agencies.
Level premium whole life: This is our most common type of whole life insurance. Guardian’s level premium policies are designed to provide cost-effective lifetime coverage, and go to ages 95, 99, and 121. Your premium will not change as a policy owner, regardless of what happens.
Limited payment whole life: This type of policy also has a fixed level premium that doesn’t change, but premiums are only payable for a fixed period of time. After the end of the payment period, the policy is guaranteed to remain paid up, no matter how long the policyholder lives.
Options for cash value growth: All whole life insurance policies guarantee tax-deferred cash value growth, but different policies and providers have different ways of calculating that growth. Guardian's whole life insurance policies offer many different options. For example, some of your cash value can be linked to the S&P 500 Index through our IPF (Index Participation Feature) rider.10,11
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Disability insurance
If you’re unable to work due to injury or medical condition, where will you get income to live on? Disability insurance can help support your family when it’s needed most.
Hospital indemnity insurance
It helps protect your finances from out-of-pocket expenses and other costs by paying benefits if you are admitted to a hospital or ICU for a covered sickness or injury.
Critical illness insurance
If you experience a serious illness like cancer or a stroke, this provides cash benefits to help pay medical and other expenses not covered by primary health insurance.
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. Links to external sites are provided for your convenience in locating related information and services. Guardian, its subsidiaries, agents and employees expressly disclaim any responsibility for and do not maintain, control, recommend, or endorse third-party sites, organizations, products, or services and make no representation as to the completeness, suitability, or quality thereof.
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 representative and refer to your individual whole life policy illustration for more information.
3 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.
4 Dividends are not guaranteed. They are declared annually by Guardian’s Board of Directors.
5 Financial information concerning Guardian as of December 31, 2024, on a statutory basis: Admitted assets = $86.8 billion; liabilities = $77.5 billion (including $60.7 billion of reserves); and surplus = $9.3 billion.
6 Universal Life Insurance may lapse prematurely due to inadequate funding (low or no premium), increase in cost of insurance rates as the insured grows older, and a low interest crediting rate. This does not apply to universal life policies which have a secondary guarantee, but if the secondary guarantee requirements are not met the policy will most likely lapse.
7 Riders may incur an additional cost or premium. Riders may not be available in all states.
8 The Disability Income and Waiver of Policy Premium Benefit Rider (form ICC21 DIR, DIR (12-2021), or state equivalent) is underwritten and issued by The Guardian Life Insurance Company of America (Guardian®), New York, NY. There will be an additional cost or premium associated with this Rider. Provisions, features, and availability may vary by state. Exclusions and limitations may apply
9 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.
10 The Index Participation Feature (IPF) is a rider available with select Guardian participating whole life policies. With the IPF, policyholders can now allocate between 0% and 100% of the cash value of paid-up additions (PUA) to the IPF each year. The cost of the IPF rider is currently 2% with a guaranteed maximum rate of 3% on the IPF portion of the policy. Policy loans against, or withdrawals of, values allocated to the IPF could negatively impact rider performance. Selection of the IPF may restrict the use of certain dividend options. The IPF provides an adjustment to the dividend paid under the policy. This adjustment, subject to the cap rate (currently 10.5%) and floor (currently 4%), may be positive or negative based on the S&P 500 price return index performance. Adverse market performance can create negative dividend adjustments which may cause lower overall cash values than would otherwise have accrued had the IPF rider not been selected. While the adjustment provided by this rider is affected by the S&P 500 price return index, it does not participate in any stock or equity investment of the S&P 500 price return index.
11 The S&P 500 price return index is a product of S&P Dow Jones Indices LLC (“SPDJI”) and has been licensed for use by The
Guardian Life Insurance Company of America (Guardian). Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Guardian. The Index Participation Feature (“Product”) is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such Product nor do they have any liability for any errors, omissions, or interruptions of the S&P 500 price return index.