the whole story of whole life

8/14/2019 The Whole Story of Whole Life

1/14

The Whole Story of

Whole Life


2/14

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.


3/14

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.


4/14

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.


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.



6/14

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


7/14

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


8/14

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.


9/14

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


10/14

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.


11/14

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.


12/14

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.


13/14

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


14/14

The Guardian Lie Insurance

Company o America

7 Hanover Square

New York, NY 10004-4025

www.GuardianLie.com

the whole story of whole life

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