Download - SecurePlus Provider Indexed Universal For Agent Use Only- Not For Use With the Public TC28713(0506)
SecurePlus ProviderIndexed Universal
For Agent Use Only- Not For Use With the Public TC28713(0506)
For Agent Use Only-Not For Use With the Public
For Agent Use Only-Not For Use With the Public
SecurePlus Provider
• Why IUL?• The Basics of Indexed Crediting• What is SecurePlus Provider?• Policy Mechanics – Premium Flow• Crediting Strategies• Policy Loans• SecurePlus Prospects• Available Riders• Summary
SecurePlus Provider Indexed Universal Life (UIL), form series 8212/8212D(0305), is underwritten by Life Insurance Company of the Southwest, Dallas, Texas. Riders are optional, may require an additional premium and may not be available in all states.
For Agent Use Only-Not For Use With the Public
WhyIUL?
For Agent Use Only-Not For Use With the Public
IA Sales are exploding!IA Sales are exploding!
$27.2 billion in 2005
Why? – Consumers are looking for “safe money places” with the upside
potential for greater interest than with fixed annuities
Advantage Index Product Sales Report – 4th Quarter 2005, February 2006
Why IUL?
For Agent Use Only-Not For Use With the Public
Why IUL?
• Flexible premiums, adjustable benefits
• Interest Crediting Strategies
– Potential to significantly outperform Fixed ULover the long-term
• Appeals to a growing segment of the market
For Agent Use Only-Not For Use With the Public
S&P 500 IndexS&P is a general indicator used to measure overallLarge Cap performance of U.S. stock market
Index performance is only used for measurement– An investment cannot be made directly into an index
LSW invests premium received:Large portion is directed to a portfolio of Government Bonds, Corporate Bonds and Mortgages(providing for the guarantees)
Small portion is directed to purchase options
“Standard and Poor’s®,” “S&P®,” “Standard and Poor’s 500,” and “500,” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by National Life Insurance Company. The product is not sponsored, endorsed, sold or promoted by S&P and S&P makes no representation regarding the advisability of investing in the Product.
The S&P Composite Index of 500 stocks (S&P500®) is a group of unmanaged securities widely regarded by investors to be representative of large-company stocks in general.
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S&P 500 Performance Compared to IUL Performance
IUL S&P 500
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IndexedCrediting
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The Basics of Indexed Crediting
• Index – For SecurePlus Provider, the index is the S&P 500®
• Indexed Segment – A specific “bucket” of money which earns indexed interest credits
• Indexed Interest – The interest credit earned by an indexed segment for a given year
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• Fixed-Interest Strategy – uses an interest rate declared by the Company
• Point-to-Point Strategy – compares the Ending Index Value to the Starting Index Value
• Point-to-Average Strategy – compares the Average Index Value to the Starting Index Value
The Basics of Indexed Crediting
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• Starting Index Value - The value of the Index on the first day of the year-long index crediting period
• Ending Index Value – The value of the Index on the last day of the year-long index crediting period
• Average Index Value – The average daily value of the Index over the 12 month index crediting period
• Annual Reset – at the end of a Policy Segment Year, the Starting Index Value is set equal to the prior year’s Ending Index Value
The Basics of Indexed Crediting
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• Participation Rate – The percentage of the Annual Index Growth that the policyholder is eligible to receive in a given year, subject to application of the Cap
• Cap – The maximum indexed interest credit the policyholder is eligible to receive in a given year, subject to the Participation Rate
• Floor – The minimum indexed interest credit the policyholder is eligible to receive in a given year
The Basics of Indexed Crediting
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1. Calculate the Annual Index Growth
2. Indexed Interest Credit
3. Multiplying this by the Participation Rate
4. Result can be no higher than the Cap and no lower than the Floor
The Basics of Indexed Crediting
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SecurePlusProvider
For Agent Use Only-Not For Use With the Public
SecurePlus Provider
• LSW’s next-generation, highly competitive Indexed Universal Life (IUL) product
• A unique and flexible package
• Combines living benefits with LSW’s indexed product expertise
• A product worth getting excited about
For Agent Use Only-Not For Use With the Public
SecurePlus Provider
Issue ages: 0- 85 (age last birthday)
Minimum Face Amount: $25,000
Rate Classes: Preferred NonTobacco
Verified & Express Standard NonTobacco
Preferred & Standard Tobacco
Substandard: Table ratings & flat extras available on
Standard NonTobacco and Tobacco
Minimum Premium: $25.00 / month
Surrender Charge Schedule: Ten-year declining charge
Account Value Enhancement: 1.25% beginning at the end of policy year 10
Policy Loans & Withdrawals: Available after the first policy year
(Policy loans and withdrawals reduce the policy’s cash value and death benefit and may result in a taxable event.)
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PolicyMechanics
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Premium Flow
1. Premium flows into Basic Strategy
2. Money in excess of anticipated charges swept
3. Sweep dates - 21st of each month
4. Excess funds transferred to chosen interest option(s)
Policy Mechanics
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For Agent Use Only-Not For Use With the Public
Basic Strategy
• Premium payments are credited to the Basic Strategy
• Fixed crediting rate (2% minimum)
• Monthly policy charges taken from Basic Strategy
• Minimum Value = 12 months of policy charges
• On the 21st of each month, excess funds are transferred (“swept”) to the three interest crediting strategies
• Allocations for future funds can be changed at any time
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CreditingStrategies
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Fixed-Interest Strategy
• Each transfer creates a new segment
• Each segment has a length of five-years
• 2% minimum interest crediting rate
• Crediting rate for segment subject to reset annually, but anticipated to remain level for full five years
• If crediting rate on segment declines, policyholder has option to transfer funds out
• At the end of five-year term, value is transferred back to Basic Strategy for reallocation
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Point-to-Point Strategy
• Each transfer creates a new five-year segment• Index growth calculated annually by comparing
ending S&P 500® value to starting value• Participation Rate, Cap, and Floor applied to Index
Growth to determine annual interest credit• 100% Participation Rate, varying Cap, 0% Floor,
and an Annual Reset
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Point-to-Point Strategy
• Participation Rate and Cap are set annually, in advance for each segment
• 2% compounded minimum interest rate over five-year term (10.4%) – guaranteed
• At the end of five-year term, value is transferred back to Basic Strategy for reallocation
For Agent Use Only-Not For Use With the Public
Point – To – PointStart Value 1000End Value 1200
S&P 500® Increase 20%
Participation Rate 100% Cap 12%
Interest Credit = 12%
Hypothetical Example
Step 1. Measure the S&P 500® on day of sweep
Step 2. Measure the S&P 500® one year later
Step 3. Determine if there is an increase
Step 4. Apply the Participation Rate, Cap & Floor
1/21/20061/21/2005
1200
1000
Point-to-Point Strategy
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Point-to-Average Strategy
• Each transfer creates a new five-year Segment• Index growth calculated annually by comparing starting
S&P 500® value to average daily value• Participation Rate, Cap, and Floor applied to Index
Growth to determine annual interest credit• No Cap, varying Participation Rate, 0% Floor, and an
Annual Reset
For Agent Use Only-Not For Use With the Public
Point-to-Average Strategy
• Participation Rate and Cap are set annually, in advance for each segment
• 2% compounded over minimum interest rate over five-year term (10.4%) – guaranteed
• At the end of five-year term, value is transferred back to Basic Strategy for reallocation
For Agent Use Only-Not For Use With the Public
Point – To – AverageStart Value 1000
“Average” Value 1100
S&P 500® Increase: 10%
90% Participation RateNo Cap
Interest Credit = 9%
Hypothetical Example
Step 1. Determine S&P 500® value on day of sweep
Step 2. Average the daily S&P 500® values for the year
Step 3. Determine if there is an increase
Step 4. Apply the Participation Rate, Cap and Floor
Point-to-Average Strategy
Average 1100
1/21/2005 1/21/2006
1200
1000
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Interest Strategy Considerations
• Point-to-PointSensitive to short-term market movement - both positive or negative
• Point-to-AverageLess sensitive to short-term market moves – more sensitive to overall trend
o Single Premium% to Fixed Interest (to cover future contract charges)
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PolicyLoans
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Variable Loan Option
Policy loans and withdrawals will reduce the policy’s cash value and death benefit and may result in a taxable event. Withdrawals up to the basis paid into the policy and policy loans thereafter would not create an immediate taxable event, but substantial tax ramifications could result upon policy lapse or surrender. If the policy were classified as a Modified Endowment Contract (MEC) all distributions would be considered taxable income.
Variable loan rate subject to change on anniversary
Variable Loans - Loan amount does not reduce the Fixed Interest or Indexed Account values
Loaned funds continue to earn interest (including indexed credits) as if no loan had occurred
For Agent Use Only-Not For Use With the Public
Fixed Net Cost Loan Option
Policy loans and withdrawals will reduce the policy’s cash value and death benefit and may result in a taxable event. Withdrawals up to the basis paid into the policy and policy loans thereafter would not create an immediate taxable event, but substantial tax ramifications could result upon policy lapse or surrender. If the policy were classified as a Modified Endowment Contract (MEC) all distributions would be considered taxable income.
Provides a true “wash loan”
Available at the beginning of year 10
100% of loaned amount is eligible
Loan interest is credited and charged on the policy anniversary
Contractually guaranteed benefit in contract
For Agent Use Only-Not For Use With the Public
Available Riders
For Agent Use Only-Not For Use With the Public
SecurePlus Provider Riders
Accelerated Benefits– Terminal Illness– Chronic Illness– Critical Illness
Accidental Death Benefit
Children’s Term
Disability Income2-year
5-year
Extension of Benefits
Guaranteed Insurability
Long-Term Care
Other Insured
Unemployment
Waiver of Target Premium
Overloan Protection NEW!
Riders are optional, may require an additional premium and may not be available in all states. Use of living benefits riders reduce the policy’s cash value and death benefit and may result in a taxable event.
For Agent Use Only-Not For Use With the Public
• Terminal Illness resulting in death within two years
• Lump-sum distribution (discounted from death benefit)
• Funds can be used for anything
• No additional cost
Policy form series no. 8052(0798)
Accelerated Benefits Rider 1
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• Chronically ill
• Unable to perform 2 of 6 ADLs or cognitive impairment
• 90-day waiting period
• Max. monthly benefit calculated as 2% of the net death benefit (actual payment is discounted)
• Must be in force for two years before benefits become available
• Funds can be used for anything
• No additional costPolicy form series no. 8095(0399)
Accelerated Benefits Rider 2
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• Activities of Daily Living• Bathing
• Continence
• Dressing
• Eating
• Toileting
• Transferring
• Cognitive Impairment
Short-term or long-term memory impairment
Loss of orientation to people, places or time
Deductive or abstract reasoning impairment
Accelerated Benefits Rider 2
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• Critical Illness• Heart Attack• Stroke• Cancer*• End stage renal failure*• Major organ transplant• ALS (Lou Gehrig’s disease)*• Blindness
• Lump-sum distribution (discounted from death benefit)• Funds can be used for anything• No additional cost
*Upon diagnosisPolicy form series no. 8165(0703) * Upon diagnosis
Accelerated Benefits Rider 3
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• Chronically ill
• Unable to perform two of six ADLs or cognitive impairment
• 90-day waiting period
• Max. monthly benefit of 2% of death benefit for nursing home or home health care or 1% for adult day care
• Funds must be used for long-term care costs
• Premium remains level
• Policy premiums or monthly charges are waived while LTC benefits are being paid
• Issue ages 0 - 70May not be available in all states. Rider name may vary by state. Policy form series no. 8096(0899)
Long-Term Care Rider
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• Provides LTC benefits after ABR2 or LTC Rider benefits have been exhausted
• Max. monthly benefit of 1% of initial face amount for nursing home or home health care or .5% for adult day care
• Funds must be used for long-term care costs
• Benefits are paid for life
• Premiums remain level
• Inflation protection available
• 5% annual compounded increase
• Starting at policy issue
• Issue ages 0 - 70
May not be available in all states. Rider name may vary by state. Policy form series no. 8097(0899)
Extension of Benefits Rider
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• Two-year payout period
• Available to both Primary Insured and Primary Other Insured
• 3-month waiting period
• Benefits paid retroactively
• Own occupation
• Min. monthly benefit = $300
• Max. monthly benefit = $2,000
• Premiums remain level
• Issue ages 18 – 55
• Some occupations are ineligiblePolicy form series no. 8054(0798)
Disability Income Rider
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• Five-year payout period
• 6-month waiting period
• No retroactive benefits
• Own occupation first 2 years ~ any occupation suited for thereafter
• Min. monthly benefit = $300
• Max. monthly benefit = $2,000
• Premiums remain level
Policy form series no. 8065(0798)
Disability Income Rider
For Agent Use Only-Not For Use With the Public
Waives the policy premium when the insured is totally disabled
6-month elimination period
Premiums remain level
Issue ages 15 - 55
Policy form series no. 8053(0798)
Waiver of Target Premium Rider (WTP)
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• Low-cost renewable term insurance
• Spouse
• Child
• Business Partner
• Min. amount = 25,000
• Max. amount = base policy face amount
• Rider stays in force to other insured’s age 100 as long as base policy remains in force
• Issue ages 0 - 85Policy form series no. 8053(0798)
Other Insured Rider
For Agent Use Only-Not For Use With the Public
• Provides term insurance on all of the insured’s children until age 23
• Coverage per child:
• Min. = $5,000
• Max. = $25,000
• New children added automatically
• Convertible to whole life or UL at any time or for double the rider face amount at age 23, marriage, or death of the primary insured
• Issue ages 15 days - 17 years
Policy form series no. 8057(0798)
Children’s Term Rider
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Accidental Death Benefit Rider1
Guaranteed Insurability Rider2
Unemployment Rider3
Other Riders
1 Form series 8050(0798), 2 Form series 8051(0798), 3 Form series 8058(0798)
For Agent Use Only-Not For Use With the Public
NEW! Overloan Protection Rider
Riders are optional, may require an additional premium and may not be available in all states.
To prevent a tax liability from a policy loan
Policy becomes “paid-up” at the point that the policy is about to lapse
Features:
Age 75 or greater and policy in force for at least 15 years
Policy in the corridor
Loans at least equal to 95% of policy’s accumulated value
Not available on CVAT
No additional cost until the rider is exercised
Policyholder will be notified when eligibility requirements are met
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Additional Enhancements
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Additional Enhancements
Surrender Charge Cap
Additional Point-to-Point Strategy NOW available
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Prospects
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SecurePlus Provider Prospects
Individuals
Death benefit protection with tax deferred cash accumulation
Retirement Income
Funding Education Costs
Emergency Fund
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Individuals
Protection of existing assets from erosion due to final expensesLong-term care expense reimbursement through the LTC riderAcceleration of the death benefit in cases of chronic or terminal illness through the ABR riders
SecurePlus Provider Prospects
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Business Market
Buy-Sell Agreements
Executive Bonus Plans
Non-Qualified Deferred Compensation
Key Employee Protection
SecurePlus Provider Prospects
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Estate Planning
Management of Estate Taxes
Settlement Costs
Probate Expense or Estate Administration Costs
Liquidity to Protect Assets from Forced Sale
SecurePlus Provider Prospects
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Summary
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SecurePlus Provider
Options – provide the best plan for your clients
Three interest crediting strategies:
1. Point-to-Point (2 options)
2. Point-to-Average
3. Fixed Interest
Total customization with available riders
Two death benefit options
Two loan options
For Agent Use Only-Not For Use With the Public
Guarantees* – provide certainty in an uncertain world
100% Participation Rate (Point-to-Point)
No Cap (Point-to-Average)
2% minimum interest rate on Basic and Fixed Interest strategies
Guaranteed interest of at least 2% annually over a five year segment for indexed strategies
Five-year policy protection period
SecurePlus Provider
*Guarantees are dependent upon the claims-paying ability of the issuing company. *Guarantees are dependent upon the claims-paying ability of the issuing company.
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SecurePlus Provider
Flexibility – provide the ability to meet your clients changing needs
Powerful loan options
1035 Exchanges with existing loans
Access to death benefit for “Living Benefits”
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Value – competitive premiums with potential for excellent performance
Ten-year declining surrender charge
125 bps credited to accumulated cash value starting at the end of contract year ten
Revolutionary no-cost living benefit riders
SecurePlus Provider
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The Competition
Competition
AmerUS / Indianapolis Life
Allianz
American General
F & G
National Western Life
Pacific Life
Union Central
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Competitive Advantages
• High lifetime rolling targets
• Ten-year surrender period
• No surrender charges on excess premium
• Three interest crediting strategies
• 125 bps account value enhancement
• Revolutionary rider suite
• 1035 Exchanges with loans (50%)
• Marketing materials
• 2 Loan options
For Agent Use Only-Not For Use With the Public
SecurePlus Provider RatesAs of August 1, 2006
Point-to-Point Strategy Participation Rate
Guaranteed 100%
Cap
12%
Illustrated – 8.0%
Participation Rate
Guaranteed 140%
Cap
10%
Illustrated – 7.4%
Point-to-Average Strategy
Participation Rate
130%
Cap
Guaranteed No Cap
Illustrated Rate – 8.9%
Fixed Interest Rate – 4.75 Basic Strategy - 4.75%
Illustration system will automatically “blend” rate based on allocation chosen
Minimum Guaranteed Cap 3%; Minimum Guaranteed Participation Rate 30%*The 4% planned rate is not guaranteed. Actual interest credited may be higher or lower*The 4% planned rate is not guaranteed. Actual interest credited may be higher or lower..
A
B
Thank You!
For Agent Use Only-Not For Use With The Public