whole Life Insurance Story
Life is an insurance policy that provides lifetime insurance protection with significant
guarantees and tax benefits for the policy owner. These
guarantees can be viewed as either rates or values. When
actuaries design a Whole Life policy, they begin by determining what rates are
going to be guaranteed. Once the guaranteed rates have been set, they are
used to determine policy premiums and values. Guaranteed rates and values
are based upon conservative assumptions.
A mutual life insurance company,
such as Guardian, will then adjust the rates and values to current conditions
through the mechanism of a non-guaranteed dividend. 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.
Whole Life Policy is built upon a foundation of three guaranteed rates:
guaranteed mortality rate - this guarantee comes from the 1980 CSO table, a
table of guaranteed mortality rates that are required by insurance
guaranteed expense factor - an allocation for expense that is covered in
three guaranteed rates are combined in an actuarial formula that results in
three guaranteed values: the premium, the death benefit and the cash
value. These three guaranteed features set Whole Life policies apart from
all other types of financial instruments. Whole life insurance has a:
Level Premium.- The annual premium
is contractually guaranteed never to change.
Death Benefit.- The level
death benefit is contractually guaranteed never to go down.
Cash Value.- The
contractually guaranteed cash value grows each year until it is equal to the
face amount of the policy at specified age, usually age 100.
Life offers market rates of return in excess of its guarantees through
dividends. Dividends are paid to the policyholder because.
insurance company's investment rate of return exceeds the guaranteed return
promised in the policy.
experience is better than that which is guaranteed in the policy.
of policy administration are less than the cost guaranteed in the policy.
Owners may choose from among several dividend options, but by far the most
widely selected option is to have dividends purchase Paid Up Additions (PUAs)
contribution that life insurance makes to the welfare of society by providing
protection for widows and orphans has resulted in it being vested with the
following significant tax benefits:
tax free death benefits.
build up of cash values inside of the life policy.
to policy values on a tax favored basis.
Life Insurance offers a level of guaranteed permanence and stability unmatched
by any other financial instrument in our highly uncertain and volatile world.
here to receive a set of Whole Life Planning Concepts.