How to Read Your Status Report
The Status Report is a picture of the policy on the date identified.
THIRD BOX DOWN IN GRID
Coverage/Form No/Premium//Cash Value #/Face Amount/Expiration
(premium, policy cash value and face amount (DB) are important)
Dividends – you don’t pay for but they create cash value, these same dividends buy additional face amounts. These are automatic dividends, they create automatic paid up additions (PUA’s).
Waiver of Premium – if applicable – is the guarantee that the company will pay the premiums every year if you become disabled, waiver falls off at age 65, nothing in CV or face amount columns.
EPUA – manual or unscheduled paid up additions rider, allows you to over fund each year, if you are putting in additional $ it will show on the status report bottom left on first page (see below).
Total – Above columns added together for total premium, cash value and face amount
MOST CRITICAL NUMBERS ON STATUS REPORT IN THE GRID:
1. CASH VALUE (how much money you have working for you)
2. CASH VALUE INCREASE PER MODE (FOURTH BOX DOWN, THIRD BOX OVER) every time you pay a premium, cash value increases by this number but this is the base cash value only, not including PUA’s so it understates the total cash value increase per mode because dividends buy automatic PUA’s in addition to any manual PUA’s you are adding
BOTTOM LEFT DETAIL BELOW GRID
Mode-premiums paid monthly, quarterly, semi-annual, yearly
Modal premium-monthly quarterly, semi-annual, yearly amount
Billing Class: GOM (automatic monthly draft)
Policy Cost Basis-how much money put into the policy, you may have put more money in than you have in cash value, this is because of the death benefit which we can teach you how to use while you are living
Outstanding Loan-amount you have borrowed against policy
Max Loan Available-amount you can borrow
Loan Interest Rate-8%, but paid in advance, Guardian’s is illustrated as 7.4% and is fixed, (some other companies may be lower but are variable). Loan interest can be paid out of pocket or borrowed against the policy. We recommend paying out of pocket if interest is deductible, if loan is used for investment the interest can be tax deductible. If someone continuously borrowed against policy and borrowed the interest the policy could implode.
Loan Payoff Amount-principal amount owed insurance company
Loan Interest-yearly interest due insurance company
MEC-there is a maximum amount of money the government will let you put into a policy before it becomes a MEC. If it becomes a MEC then withdrawals are taxable.
Last PUA Amount Paid-in order to keep PUA’s alive you’ll want to put in at least $100 per year (which we normally include in your premium)
Regarding Loans-Policy is growing from the gross cash value no matter how much the loan is, policies rise in value even though they can be 100% loaned, when you borrow money against the policy you borrow from the insurance company, the loan is collateralized by your cash value in the policy (just like a mortgage or CD in bank, the loan affects equity, but does not affect growth.)
BOTTOM RIGHT DETAIL
Net Death Benefit After loans
Net Cash Surr Value After loans
Policy Date Date of policy start
Premium Anniv Annual Anniversary
Current Div Amount paid from the insurance company to your cash value this fiscal year
Dividend Option Automatic Paid Up Additions
Current Yr Div Adds Increase in death benefit this year
MAX UNSCHED EPUA PAYMENT BEFORE MEC Cash you can add over and above your premium to increase your cash value this fiscal year. We recommend you put 1% less than what they show to make sure your contribution doesn’t create a MEC
Be sure to check if address and beneficiary are correct on status report (on Page 2). Please be sure to contact us if incorrect.