The Whole Story of Whole Life
Transcript of The Whole Story of Whole Life
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The Whole Story of
Whole Life
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Itrcti
Whole life is the most versatile nancial instrument ever devised for the protection of families
and businesses and the creation and enhancement of wealth. To appreciate the great value of
this type of life insurance protection this paper explores how it works, its uses, its benets and
the options you have in structuring a contract to meet your specic needs, and why Guardian
is the company of choice.
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Whole lie provides lietime insurance protectionwith signifcant guarantees and tax benefts...
Chapter 1: How Does Whole Lie Work? 3
dId you know...
walt dise, able t la a sbstatial ba la,
se the cash vale rm his hle lie plic t bil
a spralig theme par that is t the
rl as the happiest place earth.
Chapter 1:
H des
whle Lie wr?whle lie is a israce plic that prvies lietime israce
prtecti ith signifcant guarantees a tax benefts r
the plicer. These garatees ca be viee as either
rates rvalues.whe actaries esig a hle lie plic, the
begi b etermiig hat rates are gig t be garatee.
oce the garatee rates have bee set, the are se t
etermie plic premims a vales. Garatee rates a
vales are base p cservative assmptis. A mtal lie
israce cmpa, sch as Garia, ill the ajst these
rates a vales t crret citis thrgh the mechaism a -garatee dividend. Becase lie israce is see
as beecial t the elare sciet, sigicat tax benefts
have bee give t it that are t i ther acial
istrmets.
what Are the Garatee Rates?
A hle lie plic is bilt p a ati three
garatee rates:
The garatee mortalityrate this garatee cmes
rm the 2001 CSo table, a table garatee mrtalitrates that are reqire b israce reglatis.
The garatee interest rate this rate r Garia
plicies is 4.0% r the etire lie the plic.
The garatee expense actr a allcati r expese
that is cvere i garatee vales.
what Are the Garatee Vales?
The three garatee rates are cmbie i a actarial
rmla that reslts i three garatee vales, a it is this tri
garatee eatres that sets hle lie plicies apart rm
all ther tpes acial istrmets. whle lie israce
has:
A Garatee Level Premium The aal premim is
ctractall garatee t ever chage.
A Garatee Death Beneft The level eath beet isctractall garatee ever t g .
A Garatee Cash Value The ctractall garatee
cash vale grs each ear til it is eqal t the ace
amt the plic at a specie age, sall age 121.
(Prir t the 2001 CSo table, it as age 100.)
The graph at the tp page 4 illstrates the garatee vales
a hle lie israce plic itht a ivie vales.
The Garatee death Beet $500,000 is a cmbiati
Garatee Cash Vale a Garatee net Amt at Ris.1
year b ear the Garatee Cash Vale icreases til it iseqal t the ace amt the plic at age 121.
1 Net Amount at Risk is the dierence between the policy death beneft and the cash value.
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divies
whle lie ers the abilit t prvie vale in excess o
its guarantees thrgh ivies. divies are pai t the
plichlers i eclare b the Bar directrs. whe
ivies are eclare the have three cmpets:
The israce cmpas ivestmet rate o return in
excess o the guaranteed return prmise i the plic;
Mrtalitexperience which is better than that which
is guaranteedi the plic; a
Expeses plic amiistrati hich are less than the
cost guaranteedi the plic.
The graph the ext page illstrates h a hle lie plic
ca gr i vale ith pai-p-aitial israce prchase
ith ivies.
what Are M divie optis?
diverse plicers have ieret ees. whle lie ersa variet ivie ptis t chse rm, i rer t
cstmize r cverage s that its right r . The ivie
pti ma be chage ear b ear t aress r ees as
the chage ver r lietime.
B ar the mst iel selecte ivie pti is t appl
ivies t prchase Pai-up- Aitis (PuA). A Pai-
up-Aiti is garatee permaet pai-p participatig
lie israce. This option provides you with a growing
cash value and death beneft that is guaranteed once
purchased.uer this pti, each ear as ivies are
eclare, mre a mre PuAs are prchase hich i tr
ear their ivies. over time, the accmlati
PuAs ill set the eects ifati b prviig a greater
level eath beet prtecti a accmlate cash vales.
divies ma be pai t i cash.
divies ma be se t rece r premim.
Aitial term israce ma be prchase ith r
ivies.
divies ma be alle t accmlate ith iterest.
divies ma be se t pa bac a existig la a plic.
The llig graph illstrates h the eath beet a hle
lie plic ca gr i vale ith Pai-up-Aitial Israce
prchase b ivies.
The graph the ext page illstrates the r elemets a
hle lie plic:
The base plic garatee cash vale;
The base plic et amt at ris;
The pai-p-aiti cash vale; a
The pai-p-aiti et amt at ris.
These r elemets cstitte the ttal eath beet a
hle lie plic.
Chapter 1: How Does Whole Lie Work? 4
Age
0
100,000
200,000
300,000
400,000
500,000
35 40 45 50 55 60 65 70 75 80 85 90 95 100 105 110 115 120
$500,000 Whole Lie Insurance Guaranteed Values
Base Policy Guaranteed Cash Value and
Guaranteed Net Amount at Risk
Male Age 35 - $6,165 Annual Premiums
Guaranteed Cash Value
Guaranteed Net Amount At Risk
Age
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
35 40 45 50 55 60 65 70 75 80 85 90 95 1 00 105 110 115 120
Base Policy Death Beneft and
Paid-Up-Additions Death Beneft
$500,000 Base Policy
Male Age 35 - $6,165 Annual Premium
Base Policy Guaranteed
Death Benefit
PUA Death Benefit
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Taxati Prtecti
Becase the ctribti that lie israce maes t the
elare sciet b prviig prtecti r srvivig amil
members, it has bee veste ith the llig sigicat taxbeets:
Income-tax-ree death benefts.
Tax-deerred build up o cash values isie the
lie plic.
Access to policy values on a tax-avored basis.
The cash vales lie israce plicies ma geerall
be accesse a tax-avre basis b the ithraal
ivies r thrgh plic las.
withraal ivies rm a lie israce plic is
permitte a First-I First-ot Basis (FIFo). This measthat the rst ivies pai t t the plicer are
csiere a retr cst basis.2
All a plics cash vale ma be brre rm a
plic itht the triggerig icme tax a gai
that has bee brre rm the plic.
Age
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
35 40 45 50 55 60 65 70 75 80 85 90 95 100 105 110 115 120
Policy Elements Whole Lie With Dividends
Purchasing Paid-Up-Additions
$500,000 Base Policy
Male Age 35 - $6,165 Annual Premium*
Base Policy Net Amount At Risk
PUA Net Amount At Risk
Base Policy Guaranteed
Cash Value
PUA Cash Value
*Based on the 2008 Dividend Scale.
Dividends are not guaranteed and may
vary rom year to year. Guardian has paid
dividends to its policyholders ever year
since 1865.
2 Cost Basis is the investment that is made in a lie insurance policy. The ormula or cost basis is the aggregate amount o premium paid on a base contract and permanent benefts under the contract, or other
consideration paid or the contract minus the aggregate amount received under the contract, to the extent such amount was excluded rom gross income.
Chapter 1: How Does Whole Lie Work? 5
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Human lie value is the most valuable asseto a amily or business...
3 S.S. Huebner, The Economics o Lie Insurance, page 5, (Executive Asset Mgmt. 3rd ed. 1996) (1927)
Chapter 2: What are the Dierent Uses or Whole Lie? 6
dId you know...
i 1913, the uite States Cgress gave special tax
treatmet t hle lie israce as a icetive r
iivials a bsiess ers h ere expecte
t tae mre respsibilit r their acial tres.
Thse same iqe tax beets remai i place r
ivestrs ta.Chapter 2:what are the dieret uses
r whle Lie?
whle lie israce prvies a meas b hich amilies a
bsiesses ma ej the beet their hma lie vale he
it is threatee b lss.
Hma Lie Vale Prtecti
Prpert vales, hether the exist i the ctext a amil
r a bsiess, are i act the reslt hma ert. Hma lie
vale is clearl see i a familyheever icme is eare t
prvie r that amils ecmic ees. Hma lie vale isclearl see i a business here a e pers is te ietie
as a sigicat ctribtr t revee a earigs.
whle lie israce prvies a meas b hich a iivial
ma isre their hma lie vale.
Slm Heber ees Hma Lie Vale as the capitalized
monetary worth of the earning capacity resulting from the
economic forces that are incorporated within our being: namely, our
character and health, our education, training, and experience, our
personality and industry, our creative power, and our driving force
to realize the economic images of the mind.3
Mst peple see the imprtace isrig the vale
prpert sch as their hme r car r its replacemet vale
a are able t s ith their casalt israce. The
hma lie vale a iivial, hich is b ar the mst
valable asset a amil r bsiess, is als israble r its
replacemet vale a permaet basis ith hle lie
israce. whle lie israce prvies a arable,
eective a permaetl iemiig a amil r bsiess
agaist the lss its mst valable asset.
There are ma beets that a amil ma ej rm the
prcti icme, sch as the prchase a hme,
rearig a ecati chilre a the ejmet lie.
The iemicati the breaiers i a amil ill esre
that these beets ill ctie t the srvivrs i the evet
eath.
Famil Prtecti
The eath beets lie israce ca assre the ecmic
ctiit a amil at a time he it is ace ith the greatest
all pssible tramas, the eath a belve ather, mther,
hsba r ie. whle lie israce ca als assre acial
stabilit thrgh the ig :
Mrtgage prtecti;
Ecati ig; a
Icme ees.
Bsiess Prtecti
Bsiesses ace special israce ig ees i rer t
prvie a bsiess ctiit pla that ill prtect the ers
i the evet eath. whle lie israce is ieall site t
prvie the capital eee t aeqatel b the iterest a
ecease er a iemi the bsiess agaist the lss
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the services, expertise a sill a e pers. Lie israce is
ieall site t aress r majr areas bsiess plaig:
The ig b-sell agreemets a stc reempti
plas;
Fig spplemetal retiremet prgrams;
ke pers iemicati, a
The pamet las a mrtgages.
Estate Plaig
Plaig r the rerl traser prpert at eath ca
miimize taxes a prvie r heirs i a a that ill refect
a iivials esires. whle lie israce plas a e rle i
prviig r lve es b erig:
Aeqate liqiit t pa estate a iheritace taxes;
Assets t geerate icme r a srvivig spse a
chilre;
Estate eqalizati amg heirs, a
Fig r special ees chilre.
Asset Maximizati
oe the iqe beets hle lie israce is the
a that it ehaces the vale ther assets i r estate.
The presece garatee hle lie israce gives the
er the abilit t se estate assets i as that l t bepssible i the israce i t exist. whle lie is the
permissi slip that ma eable t maximize retiremet
icme a r persal et rth. Fr example:
The Per t Csme The presece hle lie
israce i r estate ill all ther assets t prce
greater icme b prviig access t the pricipal as ell
as iterest as a srce icme. Lie israce gives the
er the per t csme assets that l therise
have t be maage i a ltra-cservative ashi i
rer t preserve the pricipal a the icme stream it
prces.
Pesi Maximizati Mst retirees ill select a jit
a 50% srvivr ait as the retiremet icme pti
their pesi pla. The cst selectig this pti is
a ler retiremet icme, as mch as 15%, lle b
a icme t the srvivig spse 50% the lere
retiremet icme. The presece permaet hle lie
israce ma eable a retiree t tae a mch higher
retiremet icme i the rm a sigle lie ait
becase the israce beets ill be available t a
srvivig spse as a tre srce icme.
Charitable Remaier Trst The cst sccessll
bilig a bsiess r maagig a persal ivestmet
prtli is te measre b the erms capital gais
tax that mst be pai he a bsiess er ls t sell
a bsiess iterest r prtli hligs i rer t
retiremet icme. ote acial sccess brigs ith it
a esire t express beevlece tars thse charitable
cases that are par ticlar iterest. with a charitable
remaier trst, these t seemigl iverse ees a
esires ca meet i a pla that prvies:
A lietime icme r a beevlet r;
A sbstatial beqest t a charit chice; Aviace the capital gais tax; a
Sigicat icme tax ectis.
The existece permaet hle lie israce i the estate
a r maes it pssible t achieve the esire charitable
itet ith all the cllateral beets hile prviig a itact
traser estate assets t heirs.
Chapter 2:What are the Dierent Uses or Whole Lie? 7
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Instantly with the payment o the frst premium,Guardian sets aside... the entire death beneft or your amily.
Chapter 3: What are the Benefts o Whole Lie Insurance? 8
dId you know...
estate taxes ca ipe t the accre vale
retiremet accts, real estate a bsiesses
b rcig beeciaries t liqiate assets.
whle lies icme-tax-ree, garatee eath
beet ca cver the bill a prtect the ealth
a plichler has re t accmlate.Chapter 3:what Are the Beets
whle Lie Israce?
The Prtecti aIstat Permaet Estate
Istatl ith the pamet the rst premim, Garia
sets asie the etire eath beet r r amil. whle lie
israce prvies a garatee eath beet r the etire
lie the isre.
disabilit PrtectiLie israce is iqel ieret rm all rms savigs
a ivestmet vehicles sch as ba accts, IRAs, 401()
accts, mtal s, a brerage accts becase it ca
ctie t gr eve i are isable. disabilit sall
brigs ith it the strai rece icme, icrease expeses
a isslti existig savigs a ivestmet. The waiver
Premim Rier garatees that i isable, ill t lse
the mbrella acial prtecti prvie b a hle lie
israce plic. The plic ill ctie t prvie eath
beet prtecti, the cash vales ill ctie t gr a
ivies ill ctie t be pai jst as the l i ha
t bee isable.
Liabilit Prtecti
I ma states the beets lie israce are prtecte
rm the claims creitrs. I r state prvies this legal
prtecti, the cash vales a eath beet a hle lie
plic ill be prtecte rm lasits that ca claim ther
assets sch as ba accts, mtal s a brerage
accts.
distribti Lie a will
Lie israce is istribte lie a ill i that speci h
a h mch the beet ill be istribte t each
beeciar. ulie a ill, hever, lie israce has the
ae beet privac. wills ce prbate becme pbliccmets. The beeciar istribti lie israce is a
private, ctractal agreemet betee the plicer
a israce cmpa that passes tsie a ill a ths
prvies privac r the beeciar.
Tax-ree eath beet
The eath beets lie israce plicies are ree rm all
eeral icme taxes. The erms vale this beet mst
t be erestimate, especiall i light cstatl griggvermet expeitres a taxes.
Tax-eerre grth
The grth cash vale isie the lie israce plic is
eerre rm taxati hile the s remai i the plic.
This is et ather ealth prtectig beet r amilies a
bsiesses prvie b hle lie israce.
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Tax-avrable access t pliccash vales thrgh ithraals ivies
drig the isres lie, cash vales ca be accesse er
avrable FIFo (First-I-First-ot) tax rles. This meas that
ivie ithraals are tax ree p t the amt
cmlativel pai i premims.
Tax-avrable access t pliccash vales thrgh plic las
drig the isres lie, las tae agaist a lie israce
plic ill t trigger a taxable evet eve thgh the plic
ma have a large gai i excess premims pai.
Sel-ig
y have the pti havig the plic pa r itsel ver
time b applig ivies t pa premims. This eatre ma
be ive r chage at a time t meet the chagig
circmstaces r lie.
Abilit t ivest cash vale i
grth secritiesPlic vales are alas available via a plic la a ma be
se r a variet reass iclig ivestmet i grth
secrities.
Abilit t pa itsel bac rmaticipate earigs
oce a plic la has bee tae, the aal ivie ca be
se t help pa bac a plic la.
y ca mae irect las trsel r a reas
Cash vales ca be accesse a ema basis via a plic
la at a time a r a reas itht the applicati
a apprval prcess that is reqire r csmer r bsiess
las. whle lie israce ca the ree a plichler rm
reliace p cmmercial leers a high iterest rates.
Cllateral r a la rm a ba
A hle lie israce plic ma be se as cllateral t
btai a la rm a ba at avrable iterest rates. The
abilit t either brr irectl rm the israce cmpa
r rm a ba gives the er a hle lie israce plicsigicat fexibilit he there is a ee t access plic
vales.
Flexible la repamet terms
Lie israce plic las are fexible t the extet that they
do not need to be paid back unless you decide to pay
them back. oce a la is tae t a plic it ca be pai
bac at the pti a iscreti the plicer. whe a
plic la is pai bac, there ill be a cmmesrate icrease
i the eath beet the plic hich ma be rebrre at
a tre ate r pai t t the beeciar.
death beet icrease
whe ivies are se t prchase pai-p-aitis,
eath beets ill gr, helpig set the erig eects
ifati. Once a dividend has purchased paid-up-
additions, the additional death beneft and cash value
o the paid-up-additional insurance is guaranteed.
Chapter 3:What are the Benefts o Whole Lie Insurance? 9
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The guaranteed level premium structure givespeace o mind...
Chapter 4:What Types o Whole Lie Insurance Are Available? 10
dId you know...
the cash vale accmlatig isie a hle lie
ctract ca act as a sec emergec t
help cver retiremet, meical expeses, lg-term
care, a pamet a hse, r ther ees.4
Chapter 4:what Tpes whle Lie
Israce Are Available?
There are several tpes hle lie israce hich are
esige t prvie fexibilit a ptis i the strctrig
a israce prgram:
Level Premim whle Lie
This is the mst pplar tpe hle lie israce a it is
ere ith a garatee level premim t either age 95, 99
r 120. The level premim strctre maes the plic ieall
esige t prvie arable lietime israce cverage. Asplicer, the garatee level premim strctre gives
peace mi, becase regarless hat happes i a vlatile
rl, r premim ill t chage.
Limite Pamet whle Lie
This tpe plic has a xe level premim lie a Fixed
Premium Whole Life plic bt the premim is l paable r
a xe peri time. The mst pplar plas are Life Paid-Up
at Age 65 a 20 Payment Life. The avatage these limite
pamet plicies is that the are garatee t be pai-p
at the e the pamet peri. Ths the all valable
israce cverage t ctie r the isres etire lie
itht a pamet reqire at later ages a thrght
retiremet.
Grae Premim whle Lie
This tpe plic star ts t ith a l iitial premim hich
icreases icremetall r a peri ears. This tpe plic
is ell site r thse h have a grig icme a a esire
t prchase valable permaet cverage ith a arable
premim.
4 From National Underwriter article by Warren S. Hersch.
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Whole lie insurance may becustomized or your specifc needs.
Chapter 5:What Options Does Guardian Whole Lie Insurance Give You? 11
dId you know...
i aiti t actig as a crcial retiremet
spplemet a rig a time icreasig lie
expectac rates, ma hle lie plicies
cme ith accelerate eath beet riers that
pa t part the eath beet r thse i
ee lg term care.Chapter 5:what optis des Garia
whle Lie Israce Give y?
whle lie israce as ere b Garia has ma r iers that
ma be ae t a plic i rer t cstmize the cverage
r r specic ees. Sme the mre pplar riers are:
waiver Premimprtects i the evet isabilit b paig the premim. Becase the premim ill be
pai, cash vales ill ctie t bil, ivies ill ctie
t be pai a the acial secrit are b a hle lie
plic ill permaetl sta as a setiel prtectig ar amil.
Ehace Accelerate Beet Rieralls t accelerate the beets a hle lie plic r
chric a termial illesses. I the evet that becme
chricall ill, a prti a plics eath beets ma be
accelerate rig r lietime i are permaetl able
t perrm t t six Activities dail Livig (AdLs) r i
becme permaetl cgitivel impaire.
Ehace Garatee Israbilit opti(EGIo)gives the er the right t prchase aitialisrace the isres lie itht eviece israbilit.
There are p t eight pti ates the aiversaries earest
the isres 25th, 28th, 31st, 34th, 37th, 40th, 43r, 46th, 49th, 52, 55th,
a 58th birthas a/r p marriage, the birth r apti
a chil. The EGIo pti becmes all the mre valable i
the evet isabilit.
A isre h is isable a has their premim aive
er the waiver Premim rier ma exercise the EGIo
rier the pti ates a Garia ill pa the premim
the e plic as ell as a existig plic(ies) that
have the waiver Premim rier.
Ehace Pai-up-Aitis Riergivesthe er the right t prchase pai-p participatig israce
the ers lie. The real beet this rier is that it givespremim fexibilit s that ma a varig amts
premim t a hle lie plic. The greater the premim pai
it a plic the greater ill be the prtecti are b the
plic, the greater ill be the garatee cash vale, a the
greater ill be the tax eerre accmlati cash vales
a ivies.
Reeable Term Rier prchases te-earreeable a cvertible level term israce.
Accietal death Beet ca be ae t aplic t prvie a aitial eath beet i the evet
eath ccrs b accietal bil ijr. The beet ill be
ble i the ijr is sstaie hile beig a passeger i a
pblic cveace.
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Guardian is committed to its status as a mutual lieinsurance company and is here to provide...
now and ar into the uture.
Chapter 6: Why Guardian? 12
dId you know...
e earl a cetr a a hal ag,
Garia has pai t aal ivies t
r sharehlers ever ear sice 1865.
Chapter 6:wh Garia?
Qalit Cmpa
Garia is recgize b all the majr ratig agecies as
a cmpa that prvies sperir acial stregth. The
llig table shs Garias ratigs rm each the ve
majr ratig agecies. The mber t the right each ratig
shs the ra the ratig t the ttal mber pssible
ratigs r each agec.
Guardian Ratings
Rating Agency Rating Rating Total Possible
Rank Ratings
AM Best Cmpa A+ 2 15
Staar & Prs AA 3 20
Ms Aa2 3 21
Fitch AA+ 2 24
TheStreet.cm A 2 16
Ratigs are crret as Jaar 1, 2008
Mtal Cmpa
Garia is pr t be e the e remaiig majr
mtal israce cmpaies i the ati. we are e b
r plichlers h share irectl i r aal earigs.
we have stchlers expectig ivies, immeiate
retrs r shrt-term grth. Garia has stc a ths
stc ptis exercisable b seir maagemet that ca
sap aa the acial vitalit the cmpa. Garia is
cmmitte t its stats as a mtal lie israce cmpa
a is here t prvie plichler israce ees, a
ar it the tre.
Sli Histr
Fe i 1860, e have pai t ivies t r plic-
hlers ever ear sice 1865. As a mtal cmpa e have
bee able t prvie e the lest et csts riar
lie cverage ear ater ear, hile still retaiig a sli acial
psiti.
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Cclig nte
The protection and wealth-enhancing benets of whole life insurance make it the most
comprehensive nancial tool available today. Its great value is enhanced by its exibility, which
enables it to be customized for a variety of consumer needs. Premium exibility is provided by
premium and dividend options. The loan feature and the ability to withdraw dividends
provides readily available liquid assets. Together, the guaranteed cash value, guaranteed death
benet and guaranteed premium provide a solid foundation for nancial protection and the
building of wealth in a turbulent and uncertain world.
The Whole Story o Whole Lie revised 2008, Cliord P. Kitchen, CLU, ChFC, CFP, CFA, MSFS
Copyright 2003-2008 by The Guardian Lie Insurance Company o America, a New York Corporation
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8/14/2019 The Whole Story of Whole Life
14/14
The Guardian Lie Insurance
Company o America
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New York, NY 10004-4025
www.GuardianLie.com