A recent CBS News report caught our attention, and honestly, it didn't surprise us.
According to a new Vanguard report, a record 6% of Americans made hardship withdrawals from their 401(k) accounts in 2025. That's up from 5% the year before, and the trend is only moving in one direction. The top reasons?
- 36% were trying to avoid foreclosure or eviction
- 31% were covering medical expenses
- 13% were paying for tuition
- 11% were repairing their primary residence
These aren't frivolous purchases. These are people in real financial pain, reaching into the only place they have savings, their retirement account, because they have nowhere else to turn.
And here's the painful part: a 401(k) hardship withdrawal isn't a loan. It's a permanent removal of money from your retirement future. You pay income taxes on every dollar you take out. Depending on your age, you may also pay a 10% early withdrawal penalty. And the compounding growth you lose on those dollars? That's gone forever.
This is exactly the problem that a properly structured whole life insurance policy was designed to solve.
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A SMARTER FINANCIAL SAFETY NET
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When you have a whole life policy with accumulated cash value, you have access to capital without any of the consequences of a 401(k) hardship withdrawal. Here's how it works:
The insurance company lends you their money, not yours. They simply place a lien against your cash value as collateral. This means your cash stays inside your policy, continuing to grow at the guaranteed interest rate plus the annual dividend. Your policy doesn't skip a beat.
Unlike a 401(k) withdrawal:
✓ No taxes on the loan proceeds
✓ No early withdrawal penalties
✓ No credit check or application process
✓ No mandatory repayment schedule
✓ Your cash value keeps earning while the loan is outstanding
✓ You can repay on your own timeline and reuse that capital again
Policy loan rates typically run in the 4.8% to 5.3% range, far lower than credit cards (9–29%), personal lines of credit (7–12%), or home equity lines in today's rate environment.
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THE 150-YEAR TRACK RECORD
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The mutual insurance companies we work with [One America, Penn Mutual, New York Life, and MassMutual] have paid a dividend above and beyond their guaranteed interest rate every single year for over 150 years. Through recessions, world wars, market crashes, and pandemics. The dividend is not contractually guaranteed, but its consistency is unmatched by virtually any other financial product.
That's the kind of reliable, accessible, tax-advantaged capital that doesn't show up in a Vanguard report on hardship withdrawals, because people who have it don't need to raid their retirement accounts when life gets hard.
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IS YOUR FINANCIAL FOUNDATION BUILT FOR MOMENTS LIKE THIS?