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December 6, 2004
Guardian Enhances DI Coverage of Business Obligations Via Industry-Unique Offering
NEW YORK, N.Y., December 6, 2004 — Business owners who have borrowed money in order to expand their businesses will benefit from a decision by The Guardian Life Insurance Company of America (Guardian) to increase the amount of loan obligations covered in the event of a disability.
Guardian's Business Reducing Term policy will insure up to 100% of monthly loan payments—principal and interest, provided the obligation rests with a single principle—should a business owner become totally disabled. This represents an increase over the policy/s prior 80% level.
"Business Reducing Term addresses a critical gap in the contingency plans of many business owners," said Matthew Gottfried, ASA, Director of Individual Disability Income at Berkshire Life Insurance Company of America (Berkshire), a wholly owned stock subsidiary of Guardian.
"As long as they can run their businesses, any loans they take out will be repaid from the earnings of the business. If they die, life insurance can pay. But if they become disabled due to sickness or injury and can't work, their business assets could be lost due to loan forfeiture."
Guardian is currently the only disability insurer offering a product specifically designed to fund financial obligations that require periodic payments expiring at a given time. In addition to loan payments, other applicable client scenarios include business owners who offer guaranteed employment contracts to their employees and those who've purchased a business or professional practice with an amount payable to the seller over a specified period.
Through Business Reducing Term insurance, business owners can insure against a disability preventing them from meeting such fixed payment obligations as:
 | The funding of medium term loans dependent upon the business talents of a key individual for their repayment; |
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| Purchase agreements; |
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| Salary contract guarantees; and |
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| Contract performance guarantees. |
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How Does It Work?
Just as life insurance protects against the hazard of death, Business Reducing Term disability insurance protects against the hazard of total disability. It is similar to decreasing term life insurance in that the total coverage reduces over time.
However, while the face amount of a decreasing term life policy diminishes, the Business Reducing Term benefit will always be the full amount of monthly indemnity. Only the number of months payable will be reduced.
For example, if a business owner becomes disabled, his or her Business Reducing Term policy for a $1,000 monthly indemnity will pay $1,000 a month until the term ends (or until the business owner recovers). The policy term can be anywhere from five years to 30 years.
While the maximum monthly benefit for Business Reducing Term is typically $10,000, Berkshire's Gottfried pointed out that, based on individual consideration and financial documentation, amounts can be higher.
"Guardian's financial representatives are in a unique position to offer their business-owner clients a product with which no other company can compete," he said. "By increasing our business obligation coverage levels, we are signaling Guardian's long-term commitment to a key sector of the U.S. economy."
About Guardian
Founded in 1860, The Guardian Life Insurance Company of America, New York, N.Y. (Guardian), is the fourth largest mutual life insurance company in the United States. As of December 31, 2003, Guardian and its subsidiaries had $37.2 billion in assets. With more than 5,000 employees, approximately 3,000 financial representatives and nearly 100 agencies nationwide, Guardian and its subsidiaries protect individuals, businesses and their employees with life, disability, health and dental insurance products, and offer 401(k), financial products and trust services. More information on Guardian can be obtained at www.guardianlife.com.
Business Reducing Term issued on Guardian Life Insurance Company of America policy form AH55-A.
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