so here we're going to go through the Guardian indexed whole life feature in particular how it
works and the pros and cons this way I can be well educated on it so if I decide to use it
at any point over the life of the policy I know exactly how it will work and the advantages and
disadvantages so let's start with the Guardian product just the basic dividend because this
is important to set the foundation their 20/20 dividend rate will be five point six five percent
so what that five point six five percent is made up of is I have a guaranteed floor of four percent
there's a total dividend of five point six this means they declared a surplus of one point six
five percent so after all of their employees and shirts expenses claims everything was paid out
the remaining excess the percentage was one point six five you had the two together that gives you
your total dividend rate and that's consistent with just about any dividend paying whole life
insurance policy and company I should say so how this works with the index feature is this really
gives one the way I often phrase it is a grant one more potential on earnings on a whole life
insurance policy it's not an eye ul in any way shape or form so with the indexed feature how it
works is one I have the guaranteed rate of three percent and then you'll see the difference here
on the dividend option we have the basic surplus whereas with the index feature you see this S&P
500 index and a percentage we don't know is the SP we don't know what it's going to do so how
this works is instead of receiving the surplus I have the option to participate in the in the S&P
500 index strategy and exactly how this works when I say indexing is if the S&P 500 goes up what will
happen is I will go up with it if it goes down my principles protected it's really how it works is
if it increases you'll see next we have a cap rate of twelve and a half percent what that means is if
the market produced twenty percent your earnings I'd be capped out at twelve and a half percent and
that is their current cap rate can be adjusted their floor though cannot be adjusted if the
market tanked if the market tanked or produced less than four percent I'd still receive the
contractual guarantee of four percent now because this is still a whole life insurance policy not
a universal life chassis what that means is the guaranteed cash value interest rate will always
exceed the insurance expenses so when you look at the pure guarantees and all scenarios your values
go nowhere but up you're going to see an example of that in the next video as well so still a whole
life product what I'm doing is leveraging the index strategy and it is optional - meaning I
don't have to just pick one and that's it we'll go further into that so I've got a cap rate of
twelve and a half percent that's the most I can earn on any given year I have a floor which is
our guaranteed rate same thing here a 4% will not go any lower than that so if everything tanks I
stub the guarantee here's the drawback though we see in red we've got this charge of two percent
when I exercise the next feature the portion of cash value that I tie to the index the portion
that I tie meaning I don't just pick the dividend or index option to start and that's it forever I
can switch back and forth I can elect to have ten percent of my money tied to the dividend
and 90 percent to the index flip it 50/50 and I can switch it each year on my anniversary date as
well which is nice but to get back on point this two percent charge is any funds that are tied to
the index strategy so cash value linked to the index strategy here the company does assess a
two percent charge so so where this would hurt an individual and this is more of a worst case
scenario but we want to be aware of that is if I flip the index portion on to 100% for example and
everything just tanked what that would mean for my policy cash value perspective is I would still
have the guarantee of four percent however they'd assess the two percent charge which will leave me
with what a net guarantee of two percent that year however down here we do see this word optional so
let's give them the detail on this we've got a couple examples here of demonstrating how
the index feature will work and again in the next segment the next video we're going to go through
some actual numbers and projections so the first example on the Left number one assume we have 100k
in cash and I tie 100% of my cash value to the index strategy cap of 12 and a half that means
it cannot earn more than that twelve and a half percent on any given year if it does so let's
assume the market goes up by 20 percent I earned 12 and a half percent no matter what happens I
stub that two percent charge so what's my net ten and a half percent just like a dividend of
six percent a rate here of ten and a half percent whatever that rate is and this is important this
is that is always the gross rate that is credited after the insurance expenses after the company's
mortality charges what we want to look at is the net returns or the IRR to really understand what
is the policy actually producing this way I know the actual number is not thinking I'm earning ten
percent and then find out I'm only earning eight in half so option two or scenario two since we
can really draw up a million scenarios well soon the same hunter can cash but we're gonna pretend
that I have 50% of my funds tied to the index strategy and 50% tied to the dividend strategy
because we can do this and we can switch it year-over-year too which is really nice now
how this would work is that the 50% tied to the indexed strategy participates with the S&P 500
same index strategy same cap rate of 12 and a half percent same floor on that now we've got down here
in red the charge of 2% is assessed to what only the 50% of my money my cash value that's tied to
that index feature not the entire bucket of cash value then I've got the other 50,000 linked to the
basic dividend rate of five point six five percent very straightforward there now option three on the
right same hundred can cash let's assume year one I'd go with the basic dividend five six five leave
it as is it's a dividend paying whole life policy that we have I don't know 300 videos channel at
this point year two let's assume we tie 50% of our funds to the index and 50% to the dividend
that will function on year two like this example so if we said hey the market took a little dip
not sure if it'll go down further or rebound up I only want to tie 50% of my cash value to the
index what will happen is again the 50% that's tied they assess the 2% charge on that and then
the 50% that's not tied there's no charge so the major drawback is that 2% charge which effectively
brings my guarantee down to a net of 2% on that portion of cash value where that's important or
where the potential drawback is is again if everything tanks doesn't produce anything if
I'm not participating in the dividend I'm gonna get the guarantee only again assuming everything
tanks - the charge year three let's assume I assess 25% of my cash value - the dividend
that means in this example of 100k 25,000 would participate in the basic dividend rate five six
five and then 75% will participate in the index strategy and 75% would be assessed at that 2%
charge here for everything tanked I want to flip it on at a hundred percent then a hundred percent
of my cash value is assessed with that 2% charge the point really of example 3 here is I can switch
back and forth so when we see an illustration or we or anyone is discussing this indexed feature
with a whole life policy so it's not a universal life at all it's completely different with that
indexed whole life feature it's not as if I have to just pick one and that's it and I'm I hope it
does okay no we can switch back and forth we're we're we're in a time period where the markets
been booming what a lot of individuals will do they'll look at it and say okay well I can start
with the index feature attached and PEG it at 0% this way it literally costs me nothing and
then after a correction I can decide to flip it on whether it be ten percent fifty percent
a hundred percent whatever and I can switch back and forth over time the important note
on that is I can switch that allocation like we see here over here in the third option on
my policy anniversary date so that's important otherwise we'd be playing the market and trying
to switch it all the time no we cannot do that we can switch it on our policy anniversary date only
there is a window but it's on that anniversary date is when I can make the adjustment and say
hey I want a hundred percent fifty percent whatever percentage tied to the index and the
rest to the dividend hope this was was helpful feel free to reach out with any questions