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Whole life insurance vs. guaranteed life insurance

One grows cash value while the other one is often bought as a last resort at the end of life.


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Whole life insurance and guaranteed life insurance are two permanent policies – but that’s where the similarities end. Since guaranteed life insurance is issued without a medical exam or health questionnaire, it often comes with high rates. Whole life insurance often requires a medical exam, but its rates are lower and it comes with a cash value component that grows over time and can be used while you’re still living.

Features of whole life insurance vs. guaranteed life insurance

Whole life insuranceGuaranteed life insurance
Length of coveragePermanent – lifelongPermanent – lifelong
Cash valueYesNo
Medical examYesNo
Who it’s best forAnyone in good health who wants to build cash value savings in addition to having lifelong coverage.People 50+ who want life insurance with no questions asked and who just want coverage for final expenses.

What is whole life insurance?

Whole life insurance is the most basic type of permanent life insurance coverage. As long as you pay the premiums, it remains in force for your entire life.

Whole life insurance also grows cash value, which is a separate part of the policy than the death benefit. Once you build up enough cash value, you can access it any time, for any reason. But you’ll have to pay back the loan.

How does whole life insurance work?

Whole life insurance has two separate parts: the death benefit and the cash value. Unlike other types of permanent insurance policies, the death benefit and the premiums stay the same for the duration of the policy.

Part of your premium dollars goes towards the cash value component, which the insurance company invests on your behalf. Typically, the insurer guarantees a minimum rate of return on your cash value. You can take out this money later in life and use it for whatever you wish – paying off a mortgage, buying a second home, paying for your kids’ or grandkids’ education, or as a retirement supplement.

If you take out the cash value, your death benefit is reduced by the same amount – unless you pay back the loan. If you don’t use your cash value, your beneficiaries won’t receive any of it.

What is guaranteed life insurance?

Guaranteed life insurance is issued to anyone who applies, with no health questions or medical exams required. It’s typically a permanent policy, meaning it stays in force for your entire life as long as the premiums are paid, though sometimes it could be a term policy.

Because it is issued without the insurer knowing anything about your health, it’s more expensive than any other type of life insurance.

How does guaranteed life insurance work?

Since these policies are available to anyone without any type of medical screening, they are offered in lower amounts only. Typically, you can buy a guaranteed life insurance policy with a death benefit between $5,000 and $50,000.

With a lower benefit amount and high rates, guaranteed life insurance is normally bought by people who are at the end of their life and want to buy immediate coverage. It’s also typically purchased by those who don’t qualify for a traditional policy. There is no cash value growth on these policies.

How do I compare whole life insurance and guaranteed life insurance?

Although both whole life insurance and guaranteed life insurance are permanent policies, they are different in every other way.

Both policies are fairly expensive when compared with term life insurance, but guaranteed issue is normally the most expensive type of life insurance since it doesn’t require a medical exam to be approved for coverage.

Unless you’re in poor health and can’t secure any other type of life insurance, you may want to consider a whole life insurance policy. This policy typically requires a medical exam and health questionnaire, but you’ll have lifelong coverage that grows cash value.

How to choose between whole life insurance and guaranteed life insurance

Life insurance termConsider this if…
Whole life insuranceYou’re still working and want a permanent policy that gives you lifelong insurance coverage, with a cash value component that grows over time.
Guaranteed life insuranceYou’re not in good health and are nearing the end of your life, but want some type of insurance to pay for final expenses such as end-of-life medical expenses, funeral and burial.

Compare life insurance policies

Name Product Issue age Minimum Coverage Maximum Coverage Term Lengths Medical Exam Required
18 - 100 years old
5, 10, 15, 20, 25 and 30 years
This life insurance broker combines technology and the human touch to match you with a policy tailored to your needs.
18 - 85 years old
10, 15, 20, 25, 30 years
Depends on provider and policy
Compare affordable quotes from 12+ A-rated life insurance companies side-by-side.
21 - 60 years old
10, 15, or 20 years
Depends on policy
Get affordable term life insurance with accelerated underwriting or no-exam coverage up to $1,000,000. Available in all states except CA, NY and MT.
Nationwide life insurance
40 - 95 years old
10, 15, 20 and 30 years
Get term, whole, universal or no-exam life insurance with up to $1 million in coverage.

Compare up to 4 providers

Bottom line

Guaranteed life insurance often offers lifelong coverage, but it doesn’t come with any cash value and its rates are higher than a traditional policy since it doesn’t require a medical exam. Whole life insurance grows cash value over time, while also providing lifelong coverage. The rates will likely be lower than guaranteed issue policies but will require a medical exam and health questionnaire.

To check rates for both policies, compare life insurance companies to see which is a better fit for you.

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