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What is Whole Life Insurance?

Whole Life is a versatile financial instrument used for protecting families and businesses while creating and enhancing portfolio wealth.

Whole Life insurance can create and provide the insured:

  1. Guaranteed lifetime insurance protection1
  2. A comprehensive portfolio asset
  3. Internal guaranteed rates and values
  4. Policy dividends2
  5. Tax advantages3

Our world is uncertain and our economy can be volatile Whole Life insurance offers a level of guaranteed permanence and stability making it a truly unique and versatile asset.

Whole Life insurance provides a means by which families and businesses can secure the benefit of their human life value if it is threatened by loss.

  1. Family and Business Protection: the death benefits of life insurance can assure economic continuity
  2. Estate Planning: the orderly transfer of assets at death can minimize taxes and provide for heirs you designate
  3. Asset Maximization: Whole Life is the a permission slip that may enable you to maximize retirement income and your personal net worth.  Once your legacy is secured with life insurance, you’ll be able to spend down other assets for your retirement.

Many today are considering life insurance as an asset class in their overall financial portfolios.  Life insurance is an ideal asset class with which to diversify your portolio.  In addition to providing a death benefit, permanent life insurance, specifically participating Whole Life, has lifetime benefits that are unique and uncorrelated to the financial markets.

Tax Advantages

Life Insurance is viewed as a good thing for the benefit and welfare of society.  Therefore significant tax benefits have been given to it that are not found in other financial instruments.  These include:

  1. Income tax free death benefits
  2. Tax deferred build up of cash values inside the policy
  3. Access to policy value on a tax favored basis

The asset that is not affected by stock market fluctuations.  There is virtually no other financial asset like whole life insurance.  Compare some of its features with other financial instruments –the benefits are exceptional:

  1. Guaranteed death benefit, typically income-tax free to beneficiaries.
  2. Guaranteed cash value is not correlated to the stock market.
  3. Access to cash available through withdrawals and loans4.  Policy loans may be income tax-free as long as the policy is in force.
  4. Policy can be transferred or pledged as collateral for a loan.
  5. In the long run, the cash values provide stable returns over time.
  6. Self-completing in the case of disability with a Waiver of Premium Rider5.

PUA  Paid-Up Additions

Paid-up additions are purchased with dividends or through a paid-up additions rider. It increases both the policy’s death benefit and cash values.

Leveraging your assets and when more is more

The paid-up additions rider allows the policyholder to add additional money over and above the policy’s premium to grow both the death benefit and cash value. All that is needed to maintain the rider is a minimum of $100. per year.

Flexible features built for change

Since life insurance is a long term asset designed to fit your financial profile during your lifetime, the Paid-Up Additions Rider on a whole life policy was created to dovetail with the policy to provide more control. PUA allows you to:

  1. Schedule an amount that you wish to pay with your policy premium each year.
  2. Make unscheduled payments within policy limits at any time, assuming that the rider is selected and funded at issue.
  3. Alter payment amounts from year to year, which will affect the cash value growth.
  4. Earn dividends on the additional paid-up insurance purchased.  The timing of the payment relative to the policy anniversary will affect policy values.

Moreover, as values build, the policy becomes a source of ready, liquid cash available. And, just as policy loans are typically available income tax-free, withdrawals from PUA are income tax-free up to the policy basis.  Plus, the PUA rider is not a contractual obligation — just an annual contribution of $100 keeps this option open. In the event of disability, a Waiver of Specified Amount rider5 purchased when the policy was issued would cover specified PUA payments in addition to the policy’s premium.

1All whole life insurance policy guarantees are subject to the timely payment of all required premiums and the claims paying ability of the issuing insurance company. Policy loans and withdrawals affect the guarantees by reducing the policy’s death benefit and cash values.
2Dividends are not guaranteed. They are declared annually by Guardian’s Board of Directors.
3Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.
4Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and loan interest. Withdrawals above the cost basis may result in taxable ordinary income. If the policy lapses, or is surrendered, any outstanding loans considered gain in the policy may be subject to ordinary income taxes. If the policy is a Modified Endowment Contract (MEC), loans are treated like withdrawals, but as gain first, subject to ordinary income taxes. If the policy owner is under 59 ½, any taxable withdrawal may also be subject to a 10% federal tax penalty.
5Waiver of Premium and Waiver of Specified Amount will incur an additional premium.

Disability Insurance

Premier Protection for Your Income

You have spent a significant amount of time, money and energy to become the professional you are today. That investment should be protected with comprehensive individual disability income insurance. If you become too sick or injured to work, disability income insurance can help replace your income better allowing you to maintain your lifestyle. Policy, including its premier options, is purposefully designed for high performance during and after a disability.

The Reality you are Vulnerable

3 in 10 Americans suffer a disability lasting 3 months or longer before age 65 and the causes of disabilities are more common that you might think. According to a claims review conducted by the Council for Disability Awareness, common examples of long-term disabilities include:

  • Neck and back pain; joint, muscle and tendon disorders;
  • foot, ankle and hand disorders
  • Cancer
  • Heart and circulatory disorders, strokes
  • Physical injuries
  • Source:  The 2013 CDA Long Term Disability Claims Survey

Keeping your income strong

  • A disability income insurance policy pays a monthly benefit if you
  • become too sick or injured to work
  • Industry-leading coverage pays benefits for more sources of income, including
    • Base salary
    • Incentive compensation
    • Retirement contributions
  • Flexibility to purchase additional coverage as your income increases
  • Our Special Limits for New Professionals Program helps you obtain high quality
    coverage without proof of income

Protecting your income is important.

Your income is your most valuable asset and protecting that income is one of the most important financial decisions you will ever make. If you become too sick or injured to work, disability income insurance can provide the cash you need to support your family and your lifestyle.

We make it affordable.

Apply for valuable individual disability income coverage at competitive rates while you are young and healthy. With DI you can choose graded premiums that start low and increase according to a guaranteed pre-determined schedule as your income increases and at any time until age 50* you can convert to premiums that remain level each year.

If you are starting out in your career, you will be surprised to know that comprehensive disability income insurance may be more affordable than comparable coverage issued by other carriers.

The Bottom Line: How Do You Feel About Your Money?

For the wise consumer, a vital component underlying every financial strategy should be a solid foundation of life insurance. In fact, income from other assets can easily be used as a funding vehicle for a life insurance policy and its enhancements such as PUA. These synergies are a smart way to create, leverage, and retain wealth for the long term.

Contact us and learn how we can help you

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