Protecting Your Income in Both Short & Long Term Note to Presenter: Fill in your name and agency or title on the first slide. This is a short presentation intended for use with individuals who might be good candidates for “extended benefits” – that is benefits that pay at the end of a DI contract. This presentation discusses the Lump Sum Disability Benefit Rider fro ProVider Plus. After introductions, say: Thanks for being here today, and for taking the time to think about your income and what it means for your future. Today we’re going to focus on how a disability can affect you in the long term – and some of the ways that you can counter those effects. John Q. Agent Agency

Disability Income Insurance Your income is the foundation of the life you’ve created. The place you live, buying food, paying utilities, making loan payments…..All of these things depend on your income. If you became too sick or injured to work, disability income insurance is there to help replace your income. Disability income insurance helps replace your income if you become too sick or injured to work.

Short-Term Needs While disabled, most people are trying to keep their life going…So the monthly disability benefits end up being used for groceries, rent or mortgage, car or student loan payments, and so forth. While you’re trying to get better physically and get back to work, disability benefits play a key role in keeping the rest of your life on as even a keel as possible. Disability benefits are typically used for day-to-day expenses.

But What About Long-Term Plans? Savings for long-term goals typically suspended. Education savings Retirement contributions During a period of disability, your focus is on your own health, and trying to keep the rest of your life going. However, most people find themselves suspending the contributions they were making to savings for longer term goals. Saving for things like children's’ college education, putting money into a retirement plan, and so forth take a hit. The Guardian Life Insurance Company of America New York, NY 10004

Lump Sum Disability Benefit Rider Offset Those Missed Opportunities Lump Sum Disability Benefit Rider Benefit equal to 35% of all of the total and residual disability benefits paid over the lifetime of your policy Lump Sum payment when your policy ends (age 65 or 67) You choose how to spend it – any way you want. Educating children Funds for retirement Remodeling or purchasing a retirement home Buying an annuity Payment made whether you’re healthy or disabled at the end of your policy We have something that can help offset this setback to saving for your long-term goals. It’s an option, or a rider, that you can add to your disability policy. Remember, the benefits of a disability policy itself are paid at the time of disability. But the benefits from this option aren’t paid until your policy is over – at age 65 or 67. We look back at the benefits that we’ve paid you either when you were totally disabled, or if you have a Residual Disability Benefit Rider, residually disabled. (That’s when you are not totally disabled, but because of your sickness or injury, you experience a loss that is 15% or more of your pre-disability income.) We take 35% of all of the benefits you received over the years, and you get that amount in a lump sum. And it doesn’t matter whether you’re still disabled at the end of your policy or not. Maybe you were disabled for a few years at some point in the past, but recovered and got back to work. .. The benefit is still payable. Now, you should note that the option still has to be in force when the policy ends. And the period of time you were out has to be enough so that the sum of those benefits has to be equal to or greater than 12 times what your monthly disability benefit is (a year’s worth of benefits in essence) It’s important to note that this money can be used for anything you’d like. So maybe at age 65 or the end of your contract, you find that you want to move to a place more conducive to retirement, maybe you have kids whose education you need to pay for…..Maybe you’ll use the money for the day-in-day-out expenses of your retirement. What’s great about the lump sum is that it gives you a lot of flexibility. Who knows what your circumstances might be at that point? The lump sum gives you the freedom to deal with whatever hand you’ve been dealt. The Guardian Life Insurance Company of America New York, NY 10004

Example Savings for long-term goals: Age 47 Healthy Actively Working $1,375 per month in a 401(k) retirement plan $800 per month to a 529 education savings plan Let’s just walk through an example. Let’s say we’ve got a 47 year old male making $175,00 a year. He’s healthy, life’s going along smoothly – and he’s saving money --- Putting $1375 a month into his 401(k) and another $800 a month into a 529 college savings plan. Age 47 Healthy Actively Working Earning $175,000/year The Guardian Life Insurance Company of America New York, NY 10004

He’s in a serious auto accident and suffers multiple injuries. However, he’s in a bad car accident….so that nice smooth trajectory he was on is interrupted. He’s in a serious auto accident and suffers multiple injuries. The Guardian Life Insurance Company of America New York, NY 10004

4 Years During 4 Years Accident $303,180 24 months – Partial Benefits 24 Months – Totally Disabled 24 months – Partial Benefits (residual /recovery) benefits During 4 Years Altogether he ends up being unable to work at all for 2 years. He’s hospitalized, in physical therapy, and so forth. Then for another 2 years, he’s started back to work part-time and slowly able to increase his hours. Now while he was out, he’s lost some clients because they certainly couldn’t wait around for him to get better – So it takes him awhile to get back up to 85%+ of his pre-disability income. Now, during this whole 4 year period: He was getting benefits from his disability income policy – And that added up to $303,180 over 4 years – But this guy was making $175,000 a year, so the day-in-day-out expenses of his life – groceries, home, utilities, etc. will eat up most of that. And he puts his savings on hold while he’s trying to get through this period. All savings suspended during disability & recovery. Disability Benefits Received: $303,180 The Guardian Life Insurance Company of America New York, NY 10004

Healthy and actively working Life Goes On Normally Resumes setting money aside: 401(k) retirement plan 529 education savings plan So he gets back to good health and continues to work until age 65. Now that he’s back to work, he’s returned to saving for retirement and his kids education – So things got back on track – But he still had that 4-year hole in his savings, and that’s significant, given the time value of money. Healthy and actively working to Age 65 The Guardian Life Insurance Company of America New York, NY 10004

+ $106,113 Lump Sum benefit (35% of $303,180) $409,293 Age 65 At Age 65 $303,180 During disability + $106,113 Lump Sum benefit (35% of $303,180) $409,293 in Total Benefits So let’s say his disability policy ends at age 65 too. So we look back at what he got for benefits over the life of his policy – And that was $303,180. And we take 35% of that and give him a lump sum check. Now, back when he bought his DI policy, he had no idea what his circumstances might be like at 65 --- And that’s why we designed this benefit to be a lump sum. That gives him maximum flexibility to spend it however he wants, depending on what his needs are at the time. Maybe he just wants to put it in the bank and use it for daily living expenses. Perhaps he wants to remodel his house so he can age in place – Or maybe he wants to pack up and move to another part of the country, closer to children. He decides what he wants to do with that money. But it’s there to help offset that period of missed savings back in his 40’s when he was too injured to work, and then during his recovery. So altogether, he got the $303k back at the time of disability, plus another $106k – So altogether he got over $400k in benefits from his policy. And that’s just for a 4-year period – That would be even higher for someone who was so disabled they never were able to go back to work. The Guardian Life Insurance Company of America New York, NY 10004

Lump Sum Payment How would clients who suffered a disability during prime working years use their Lump Sum benefits? Take a home equity loan to make their current home handicapped-accessible Refinance a home to lower mortgage payments Pay off loans taken to pay for children’s college education Supplement the lower-than-expected balance in their 401(k) plan. For a business owner, use the money to help fund retirement in lieu of money they’d expected to get from selling the business. We’ve done quite a bit of research with consumers about how they’d want to receive disability benefits. And overwhelmingly, we heard that they wanted flexibility. It’s very difficult to predict what your circumstances will be when your DI policy ends (age 65 or 67) so we designed as much flexibility as we could into this benefit. People who experienced a disability during prime working years told us that they’d want to use a lump sum of cash to: Take a home equity loan to make their current home handicapped-accessible Refinance a home to lower mortgage payments Pay off loans taken to pay for children’s college education Supplement the lower-than-expected balance in their 401(k) plan. For a business owner, use the money to help fund retirement. Small business owners often view the business as their retirement plan – So, when a disability struck, being forced to sell or close far earlier than planned means their nest egg is much smaller than they’d planned. YOU choose how you’d want to use the money. The Guardian Life Insurance Company of America New York, NY 10004

Guardian’s is the only DI policy in the marketplace to offer the option of a lump sum disability benefit at the end of the contract (age 65 or 67). Now, I’d like to open things up for questions. Thank you for coming today. I hope that the time we’ve just spent together have helped you appreciate the impact a disability could have on both your current lifestyle as well as your long-term plans. Conclude by saying that you are available for individual consultations to discuss further and help get the process started. You can use a Seminar Evaluation form for attendees to give you their contact information and indicate if they want to discuss the topic further. Suggestion: Move to the back of the room to collect any evaluation forms, so that you can be assured of speaking personally with each attendee

  Individual Disability Insurance Policy Forms 1400, 1500 or 1600 underwritten and issued by the 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. Product provisions and availability may vary by state. Optional riders are available for an additional premium. This presentation is provided for informational purposes only and should not be considered tax or legal advice. Please contact your tax or legal advisor regarding the tax treatment of the policy and policy benefits. You should consult with your own independent tax and legal advisors regarding your particular set of facts and circumstances. The information provided is not intended or written to be used, and cannot be relied upon, to avoid penalties imposed under the Internal Revenue Code or state and local tax law provisions. Pub5284BL-PPT (06/14) 2014-06838 (Ex. 06/16) The Guardian Life Insurance Company of America New York, NY 10004