Dividend Interest Rate Comparisons

Transcription

1 Dividend Interest Rate s Prepared by Individual Life Product Development and Support January 2014 The Guardian Life Insurance Company of America New York, NY Pub4774 (1/14)

2 Notes on Dividend Interest Rates & Histories The Dividend Interest Rate (or DIR) is just one component of a three-factor dividend formula that, for all mutual carriers, includes: Mortality: to the extent mortality experience is better than guaranteed expectations, the dividend will be positively impacted Expenses: expense results are reviewed annually and compared to pricing expectations to determine the amount of expense loading assumed in the dividend Dividend Interest Rate: to the extent that the investment experience of the company is better than the guaranteed interest rate assumed in pricing (generally 4%), the excess interest earnings are included 2

3 Notes on Dividend Interest Rates & Histories Dividends are not guaranteed and are declared annually, subject to Board approval for all mutual carriers Guardian s Board of Directors has approved a dividend in every year since 1868 The DIR alone will not always indicate which policy will perform better Compare policy cash value and death benefit internal rates of return for a better indication of policies relative performance Guardian s whole life policies are among the most competitive, based on carriers 2014 dividend scales MassMutual has two separate dividend scales. One is for policies issued prior to March 1996 and another for policies issued since March The slides that follow illustrate the DIR histories for policies issued prior to March Source: Information contained on all slides obtained from company announcements and publications. 3

4 Guardian's DIR and Bond Yields Dividend Interest Rates are Highly Correlated to Investment-Grade Bond Yields 30-Year of Guardian's Dividend Interest Rate Versus Moody's Aaa and Baa Seasoned Bond Yield Guardian Dividend Interest Rate Moody's Baa Bond Yield Moody's Aaa Bond Yield The Guardian dividend interest rate is graphed with a one-year lag because it is based upon the prior year's investment results. The Guardian Life Insurance Company of America 4

5 Historic 30-Year DIR 30-Year Dividend Interest Rate History Guardian Northwestern MassMutual New York Life 30-Year Average: Guardian 8.75% Northwestern 8.38% MassMutual* 8.79% New York Life 8.23% *MassMutual s dividend history applies to policies issued prior to March

6 Guardian vs. MassMutual Historic 30-Year DIR 30-Year Dividend Interest Rate History Guardian MassMutual 30-Year Average: Guardian 8.75% MassMutual* 8.79% *MassMutual s dividend history applies to policies issued prior to March

7 Guardian vs. NML Historic 30-Year DIR 30-Year Dividend Interest Rate History Guardian Northwestern 30-Year Average: Guardian 8.75% Northwestern 8.38% 7

8 Guardian vs. NYL Historic 30-Year DIR 30-Year Dividend Interest Rate History Guardian New York Life 30-Year Average: Guardian 8.75% New York Life 8.23% 8

9 Guardian vs. MetLife Historic 25-Year DIR 25-Year Dividend Interest Rate History Guardian MetLife 25-Year Average: Guardian 7.99% MetLife 7.22%

10 Guardian vs. Penn Mutual Historic 30-Year DIR 30-Year Dividend Interest Rate History Guardian Penn Mutual 30-Year Average: Guardian 8.75% Penn Mutual 7.83% 10

11 Questions Please call Life Product Services Option 2. 11