The Guardian Life Insurance Company of America is taking Whole Life insurance to a new level with the introduction of the Index Participation Feature (IPF). This patent-pending feature allows Whole Life policyholders to link a portion of their cash value to the performance of the S&P 500 Price Return Index, subject to a cap and floor; a feature that no other Whole Life insurance carrier offers in the market today.
With the IPF, policyholders can allocate a portion of their paid-up additions’ cash value, choosing an allocation from zero to 100 percent. When a policyholder allocates money to the IPF, dividends on these paid-up additions are adjusted based on the performance of the S&P 500 Index, subject to a 12.5% percent cap and a 4% guaranteed floor – ensuring that the policy’s downside exposure is limited.
In addition, the IPF allows policyholders to change their IPF allocation for future index periods, providing flexibility over time.
“Guardian is delivering a fresh, new perspective on Whole Life insurance and taking it to the next level,” said Michael Ferik, Executive Vice President, Individual Life and Wealth Management, at Guardian.
“The IPF is an innovative rider that individuals and their financial advisors have been looking for during this low interest rate environment. It offers a unique opportunity for index-linked upside potential, while still supporting the robust guarantees that policyholders have come to expect with Whole Life. And best of all, clients can change their IPF allocations as their needs change, so they are never locked in.
The Index Participation Feature (IPF) is a rider available with select Guardian participating Whole Life policies. With the new IPF, policyholders can now allocate between 0% and 100% of the cash value of paid-up additions (PUA) to the IPF each year.
The IPF provides an adjustment to the dividend paid under the policy. This adjustment, subject to the cap rate (currently 12.5%) and floor (currently 4%), may be positive or negative based on index performance. Adverse market performance can create negative dividend adjustments which may cause lower overall cash values than would otherwise have accrued had the IPF not been selected.
While the adjustment provided by this rider is affected by an external index, it does not participate in any stock or equity investment of the external index.