Frequently Asked Questions

I've heard that whole life can be used as some sort of retirement account... how does that work?

It may be used as a retirement supplement depending on the cash value of the policy. The accumulated cash values comprised of both guaranteed and non-guaranteed growth elements can be substantial. Due to the current income tax treatment of life insurance cash values, it is possible to design a policy where not only will the cash value grow income tax-deferred, but if properly structured and subject to IRS guidelines, policyowners may also receive a significant portion of those accumulated cash values distributed annually via withdrawals and/or loans on an income-tax free basis2,3.

This type of policy design is complicated. We strongly suggest working with an experienced, knowledgeable insurance professional when considering this structure.

2 Guardian, its subsidiaries, agents or employees do not give tax or legal advice. You should consult your tax or legal advisor regarding your individual situation.
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 what is paid into the policy may cause ordinary income taxes to be paid on the gain portion of the policy. If the policy lapses, any withdrawals or loans considered gain in the policy may be subject to ordinary income taxes. If the policy is a Modified Endowment Contract (MEC), loans are distributed like withdrawals. All withdrawals are distributed as gain first and subject to ordinary income taxes. If the insured is under 59 1/2 the gain portion of the withdrawal is subject to a 10% tax penalty.