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Guardian Launches Whole Life Rider Tied to S&P 500

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Guardian launched on Tuesday a new feature that allows whole life policyholders to tie a portion of their cash value to the S&P 500 Price Return Index.

The Index Participation Feature is a no-cost rider that new policyholders can opt into that will allow them to allocate between zero and 100% of their paid-up additions’ cash value to be linked to the index performance. Dividends on those additions will be adjusted based on the performance with a 4% guaranteed floor and up to 12.5%.

The new rider is the result of about a year-long effort from Guardian to offer a product that combines features of indexed universal life insurance with whole life.

“Index universal life is a product that’s grown in popularity by leaps and bounds, particularly in the last seven or eight years, and now is probably the second most popular product in the market place after whole life, at least based on premium,” Frank Chechel, second vice president of life products at Guardian, told ThinkAdvisor on Wednesday.

“About a year ago, we started to have discussions around, ‘Is there some way we can add a feature to our whole life product today that gives folks some of the index participation that they’re looking for and that they find in index UL products, but still give them some of the value-add that whole life provides?’”

Chechel said “there’s no real downside to electing” the rider because in addition to being available to policyholders at no additional cost, they can change the allocation of their cash value tied to the index every year.

“They can put a zero percent allocation down and they would get the same whole life policy they get today. They can certainly allocate more, and they can adjust that allocation on an annual basis,” he said. “I think it’s going to get added to a lot of policies, even if they don’t end up using it.

The rider is currently only available to new policyholders. “In order to get this out as quickly as possible we added it to our two flagship whole life products, called Whole Life 95 and Whole Life 99. They’re both level pay whole life products,” Chechel said. He said the company intends to add it to other whole life products “in the next few quarters,” but has no current plans to allow consumers to add it to in-force policies.

“There’s been a lot of interest in adding that to in-force. That might be something we do down the line, but for right now, there’s no specific plans to do that,” he said.

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