Whole Life Insurance
Lifelong coverage that can help build family assets.
What is whole life insurance?
Whole life insurance is a type of permanent life insurance policy that offers two primary benefits: a guaranteed death benefit paid to your beneficiaries when you pass away, as long as you keep the policy in force, and a cash value that can be withdrawn or borrowed from during your lifetime.1,2,3
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How is whole life different from term life?
Whole life insurance covers you for your entire life, and part of your premiums contribute to the cash value — a tax-efficient financial asset that is guaranteed to grow with payment of your premiums.4,5 Term life insurance covers you for a limited period — typically 10, 20, or 30 years — and doesn’t provide cash value.
Which other type of life insurance has cash value?
There are two main types of permanent life coverage with cash value: whole life and universal life insurance.6 Whole life premiums are fixed for life – they never go up or down. However, if you need more flexibility, a universal life insurance policy lets you adjust monthly premiums within a specific range.7
What can you do with cash value?
It typically takes a few years to grow into a useful amount, but once that happens, you can use it in a variety of ways. For example, you can take out tax-efficient loans against it, use it to help pay premiums, or even surrender the policy to help supplement your retirement income.
Features and benefits of a whole life insurance policy
Protection that never expires | From day one, it can provide an income tax-free death benefit to help protect your family's financial well-being. It's coverage that lasts your entire life, as long as premiums are paid. |
Cash value that grows | There's a cash value component that grows at a guaranteed rate, insulated from market fluctuations. The policy's cash value is an asset you can access during your lifetime for policy loans, funds to help supplement your retirement income, or even to keep coverage in force later in life by helping to pay premiums. |
Dividends can add value | While not guaranteed, mutual insurance companies like Guardian may pay annual dividends to participating policyholders based on company performance. 10 These can increase a policy's value beyond the growth rate guarantee and help build your overall wealth. Policyholders may use dividends to reduce premiums, buy additional coverage, or receive a cash payout. |
The cost never goes up | A whole life insurance policy has fixed premiums, meaning your payments to maintain your policy will never go up. As long as you continue to make premium payments, you're covered for life. You may be able to choose a limited payment policy that allows you to stop making premiums after a set period of time. |
Unique tax benefits | The cash value growth in your policy is tax-deferred, so you don't have to pay taxes on it every year. When you borrow against cash value, the money you withdraw up to the premiums paid may not be taxed as income. Also, the death benefit is paid income tax-free to your beneficiaries. |
Deciding if whole life insurance is right for you
Whole life | Term life | Universal life | |
|---|---|---|---|
Income tax-free death benefit | ✓ | ✓ | ✓ |
Wealth-building cash value | ✓ | ✓ | |
Guaranteed cash value growth | ✓ | ||
Flexible premiums | ✓ | ||
Policy loans | ✓ | ✓ | |
Cost efficient coverage | ✓ |
Compared to other forms of coverage, it may be hard to beat the protection and guarantees offered by a whole life policy. But if you've been looking at term life insurance quotes, you probably know that a permanent life insurance policy, like whole life, may cost significantly more. What's right for you? A lot depends on your age, your financial obligations, and your personal circumstances. If you're relatively young and healthy, your whole life insurance cost may be lower. And if you have many working years ahead of you, you may have more time to accumulate cash value.
Learn more about how to choose between types of life insurance
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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 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 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.
4 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.
5 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.
6 Permanent life insurance consists of two types: whole life and universal life. Cash value grows in a participating whole life policy through dividends, which are declared annually by the company's board of directors and are not guaranteed. Cash value grows in a universal life policy through credited interest and decreased insurance costs. The cash value of both policy types benefits when the policyholder pays an amount above the required premium.
7 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.
8 As long as your policy is not a Modified Endowment Contract.
9 Financial information concerning Guardian as of December 31, 2023, on a statutory basis: Admitted assets = $80.3 billion; liabilities = $71.2 billion (including $58.0 billion of reserves); and surplus = $9.1 billion.
10 Dividends are not guaranteed. They are declared annually by Guardian’s Board of Directors.
11 Riders may incur an additional cost or premium. Riders may not be available in all states.
12 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