In their search for financial security, younger insurance policyholders are finding what they need in whole life insurance policies.

Those under 40 surveyed by Guardian Life Insurance Co., based in New York City, primarily see whole life as a safer alternative investment product over mutual funds, stocks, certificates of deposit and other types of insurance.

Younger policyholders also clearly want to lock in financial security in short order. Guardian’s study found that this group is opting to pay off their whole life insurance premiums in 10 years or less. Of those surveyed by Guardian, 35% of whole life purchasers under 40 said they wanted to pay off their premiums as quickly as possible.

This falls in line with another finding, that 74% of younger life insurance buyers want financial security “as soon as possible,” compared with 68% of those over 40 who seek financial security as soon as possible.

Guardian polled 242 Americans online and by telephone in August . Of that sample, a total of 109 whole life owners were under age 40 and 133 over 40 participated.

“The fastest growing product is the Whole Life 10,” Michael Ferik, Guardian’s senior vice president of individual life, said in a telephone interview Monday.

That Guardian has seen a big shift in the last three years toward shorter payment schedules underscores the product’s popularity, according to Michael Wolf, Guardian’s director of market research. Before the economic crisis set in about two years ago, policyholders were taking 20 to 25 years to pay off their life insurance premiums. Purchases of what Guardian calls limited pay policies, which can be paid-up over a shorter term, were up 152% year-to-date through June 30, over the same period in 2009.

Younger policyholders also see whole life insurance as a dynamic financial planning tool, particularly as a source of post-retirement income, while maintaining a death benefit. They see the accumulated cash-value feature as a better future alternative to meet income shortfalls than tapping into 401(k) plans or hoping for consistently better returns from the stock market, according to Ferik.

“At 65 or 70, [policyholders] realize they need additional supplementary income,” Ferik said. “They can take loans, which can be done in a tax-advantaged basis, if it is done properly.”

Younger purchasers also made their decisions carefully, according to Guardian. Fifty-one percent of younger purchasers spent a “long time” considering whether to buy, compared with 41% of those over 40. Also, 46% of them did online research, compared with 31% of those over 40; 37% visited carrier Websites (27%), and 36% read articles on the topic (28%).

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