The%20Retirement%20Protection%20Plus%20Program

1
The Retirement Protection Plus Program

• Disability Insurance Protection for Retirement
  Plan Contributions

2
The Hypothetical 401(k)

• Robert is a 35 year old male earning 100,000. He
  contributes 10 of his salary to his 401(k).
  Roberts employer makes an additional 3 matching
  contribution.
• During the course of a 30 year career, Robert
  will contribute over 650,000 toward his
  retirement assuming an annual 3 increase in
  income for future years with continued personal
  contributions and employer matches of 10 and 3,
  respectively.
• Assuming Robert earns an 8 return on his 401(k)
  investments, the account balance at age 65 could
  grow to 2,377,704.

3
The Impact of a Disability on Roberts 401(k)
Hypothetical 401(k) Balance at Age 65
Assumes that no retirement contributions are
made during the disability
4
The Uncertainty of Disability

• What are the odds of becoming too sick or injured
  to work during peak income earning years?
• Can Robert predict the likelihood or duration of
  a potential disability?
• What can be done to safeguard his future and
  protect his familys financial security?

Probability of Disability Probability of Disability Probability of Disability Probability of Disability Probability of Disability
Age Today For 6 Months For One Year For Two Years For Five Years
25 35 27 17 13
30 33 21 16 13
35 31 20 16 13
40 28 18 15 12
45 25 17 14 11
50 14 12 17 10
Source 1985 Commissioners Disability Income
Table
5
The Solution The Retirement Protection Plus
(RPP) Program

• Retirement Protection Plus is not a pension plan
  or a substitute for one.
• RPP is a program that helps provide disability
  income insurance to replace retirement plan
  contributions in the event that one becomes
  disabled.
• RPP uses ProVider Plus, our own occupation,
  non-cancellable and guaranteed renewable to age
  65 individual disability income insurance
  product.
• The Goal to provide insureds with close to what
  they could have expected from their retirement
  plan if there were no disability.

Disability insurance policy forms 0100, 1100 or
2100 underwritten and issued by Berkshire Life
Insurance Company of America, Pittsfield, MA, a
wholly owned stock subsidiary of The Guardian
Life Insurance Company of America (Guardian), New
York, NY. Policy forms NC111 or NC112 provided
by Guardian.
6
The Solution The Retirement Protection Plus
(RPP) Program

• RPP protects up to 100 of current retirement
  contributions plus 100 of the contributions the
  employer makes.
• Issue limits under the RPP program are closely
  aligned with defined contribution plan limits as
  set forth by the Internal Revenue Service.
• In the event of a total disability, benefits are
  paid into an irrevocable trust.
• Important optional riders such as the Cost of
  Living Adjustment rider and the Future Increase
  Option rider will help protect increased annual
  contributions based on increased future earnings,
  without further proof of medical insurability.

7
The Solution The Retirement Protection Plus
(RPP) Program

• The irrevocable trust is administered by the
  Guardian Trust Company, FSB. There are no trust
  administrative fees.
• Proceeds are deposited into the trust and
  invested by the Guardian Trust Company, FSB at
  the insureds direction.
• Trust proceeds are available to the insured at
  age 65.

Guardian Trust Company, FSB, is a wholly owned
subsidiary of The Guardian Life Insurance Company
of America, New York, NY. Fiduciary accounts and
investments held in fiduciary accounts such as
mutual funds, annuities and securities are not
FDIC insured, are not deposits or other
obligations of Guardian Trust, are not guaranteed
by Guardian Trust, and involve investment risks,
including possible loss of principal.
8
The Solution The Retirement Protection Plus
(RPP) Program
Hypothetical 401(k) RPP Trust Balance at Age 65
Illustration Assumes
Average annual rate of return on 401(k) is 8
Average annual rate of return on RPP Trust is
8 Future Increase Option exercised whenever
applicable (min. 200 benefit increase) 401(k)
and RPP Trust 8 return is hypothetical and used
for illustration purposes only
Male, age 35, occupation class 4 Earning
100,000 annually at age 35 10 of salary
401(k) contributions Salary increases 3
annually
Policy includes 1,080 monthly benefit, 6
month elimination period, To Age 65 benefit
period, 3 Cost of Living Adjustment rider,
and 880 Future Increase Option
9
The Solution The Retirement Protection Plus
(RPP) Program

• The RPP Program offers invaluable protection
  against the impact of disability to 401(k)
  savings
• In the best of circumstances (that is, one never
  suffers a disability), the sum of all premiums
  paid under the RPP program accounts for
  approximately 1.1 of the balance of the
  hypothetical 401(k) savings at age 65
• In a worst case scenario (that is, one becomes
  permanently disabled immediately after the
  purchase of coverage under the RPP program),
  there can be peace of mind knowing that
  contributions towards retirement can continue.
  And, in our example, the RPP Trust could replace
  as much as 92 or more of the retirement savings.