Transcript AmerUs Life Portfolio Review

Indianapolis Life
Portfolio Review
Presented by:
Ronald W. Norvell CLU., ChFC.
Vice President, Sales Development
1-888-565-6900
For Appointment & Product Support:
Brian Ballard
800/ 473-2850, ext.23 [email protected]
How to choose the right product
Does your client want a Fixed or Indexed
product? Why?
Is your client more interested in Death
Benefit, or Cash Accumulation?
How important are the Guarantees?
What is your Client’s premium tolerance?
What are your commission requirements?
For Those who want a Traditional
Fixed Return product
We have the CROWN
SOLUTION
Those wanting a more traditional
Fixed Return UL product
Credit rate is announced upfront and
guaranteed for one year.
Current credit rate is 5.9%
The guaranteed rate for the life of the
product is 4%.
Included Basic No-Lapse*
20 Years – Up to Age 35
15 Years – Ages 36-55
10 Years – Ages 56-75
5 Years – Ages 76+
Crown Solution
Our underwriting Matches up with
term
Ages 0-85
– Best Preferred non-tobacco 18-75
– Preferred non-tobacco
and Preferred tobacco 18-85
Minimum Face Amount
– $25,000 ages 0-17
– $50,000 ages 18 and over
– $100,000 for Preferred and Best Preferred
underwriting classes
Special Classes
Maximum Special Class – Table 16
Ratings Payable to the Later of 20 years
or age 65
Target Commissions Paid through
Table 6
Great for 1035 Exchanges
1035 Loans Accepted if 50% or Less of Cash
Value
Enhanced Compensation Payable on Excess
Premium Up to 4 Times Target
20% Free Partial Withdrawals Annually after
First Year
Enhanced Loans Years 1-10
– Loans are charged 5% loan interest and
receive 4.5% credited interest
– 50 basis point spread
– Preferred loans 11th+ years, (Zero Net Cost)
For Those who want a Traditional
Indexed Return product
We have the VISTA
SERIES
Three Equity Indexed Universal
Life Products
Vista Advantage
– low target
Vista Select
– mid target
Vista Elite
-high target
No variable licensing
required to sell
Those who want a Potentially higher
Indexed Return UL product
Instead of a bond portfolio, The S&P index rate
of return is used.
Credit rate is announced at the end of a one or
two year period depending on strategy selected.
Current illustrated rate is 7.9% and 8.3%.
The guaranteed rate for the life of the product is
2% over either a 5 year or 6 year period
selected.
No-Lapse Guarantee to age 115 is available on
the Advantage product.
Keeping it simple, know these
Concepts!
Index & Index Earnings
Participation Rate
Cap Rate
Segments
The Six Guarantees
Two Loan Capabilities
The S&P 500
Tracks 500 selected companies as an
indicator of the growth in our economy
S&P 500 Industry weightings
How various industries were represented in the S&P
500 as of Jan. 22:
Financials 18.2%
Information technology 18.2%
Health care 14.4%
Consumer discretionary 12.9%
Industrials 10.9%
Consumer staples 8.4%
Energy 6.1%
Telecommunications 5.3%
Utilities 3.1%
Materials 2.5%
Source: Standard & Poors
Index earnings
Here is an example
on how to calculate
an index earnings.
1284.56
-1142.76
141.80 / 1142.76
=
12.41%
On Feb 6, 2004 the S&P500 closed
at 1142.76
One year later, the S&P500 closes
at 1284.56
Participation rate 100%
What you see is what you get!!
All loads were taken out at the beginning
of the portfolio period, therefore you have
100% guaranteed participation.
The participation is guaranteed!
Cap Rates Today are 12% &
30%
100% participation rate guaranteed
A 4% to 8% minimum annual cap
guaranteed based on strategy
Annual caps set in advance on segment
anniversary
Cap managed on a portfolio basis
Cap rates will primarily raise and fall
according to interest yield on bonds
New premium and segment renewals
move together.
Equity Indexed Strategy
Illustrated Rate Basis
54 year look-back of historical S&P
– January 1950 - December 2003
Performance results:
One Year cap
Two Year cap
12% cap 7.90%
30% cap 8.30%
Less volatility in illustrated rate
1% change in cap only effects illustration .4%
Note: The actual credited rate can be higher or lower, and will be based on actual S&P 500 index
movement. Unlike the illustrated rate, the actual credited rates are likely to vary from year to year.
Segments for premium
$
Basic
Interest
Strategy at 5.00%
(NET OF SALES CHARGES
and COI’S)
0ne-Year
Fixed Term
Strategy at 4.5%
Five-Year
Equity Indexed
Strategy at 7.9%
SIX-Year
Equity Indexed
Strategy at 8.3%
One
Year
Five
Years
SIX
Years
Matured
Value
Matured
Value
Matured
Value
The Six Value-Added Guarantees
Policy values protection
Annual lock-in of index gains
Annual Reset
Guaranteed credited rate
Life Protector Rider
No Lapse Guarantee Rider
– Even with a
guaranteed
conditional pay period
Soon to be available
On all products
Unique in the industry.
Protects your clients and you.
For Agent Use Only - Not For Use With The General Public
Life Protector Rider
Life Protector Rider
Optional benefit
Prevents policy from lapsing as a
result of loan indebtedness
May be added after policy issue without
underwriting
One-time charge at time rider is exercised
Life Protector Rider
How It Works
– Policy must be in force at least 15 years and
insured must be at least age 75
– Triggered when total loan balance including
interest equals 95.5% of the accumulated
value
– One-time charge of 4.0% of gross policy
value, including any loan balance and interest
– Loan balance continues to grow but it keeps
the policy in force until the insured’s death
Life Protector Rider
When the Rider Goes into Effect
– No further premium is allowed
– No further monthly deductions are taken
– All other riders are discontinued
Prevents policy from lapsing
Provides beneficiary and agent additional peace
of mind
Life Protector Rider …
What’s It Worth?
Here’s what can happen to a policy
WITHOUT the Life Protector Rider:
Male | Age 40 | PNT | $250,000 Face Amount | Solution UL from AmerUs Life Insurance
Group
Annual Premium
$4,000
x
25
$100,000
Cash Value at Age 65
$178,346
Policy Loans Beginning Year 26
$18,000
Total Policy Loans
$226,070
Total of Loans Plus Interest
$377,824
Gain at Policy Lapse
$377,824
- $100,000
Per Year
Years (Age 65)
Total Premium Paid
Per Year Until Policy Lapses At Age 81
Premium Paid
$277,824 Reportable Gain (Phantom
Income)
50% Term Blend. Illustrated at 5.9%.
Two Waiver Choices
Available on all UL’s
Waiver of Monthly Deductions
– All monthly deductions are waived if insured is
totally disabled for at least six months
– Ages 0-59 with coverage to age 65
Waiver of Specified Premium
– The monthly premium specified under the
rider is credited to the policy if the insured
becomes totally disabled for at least six
months
– Ages 0-59 with coverage to age 65
No Cost Riders
Waiver of Surrender Charge Due to
Confinement
– Annual withdrawal of up to 25% of net
account value allowed if primary insured is
confined to hospital or inpatient nursing facility
for at least 30 consecutive days
Accelerated Benefits Rider/Caring for
Today Benefit
– If insured is diagnosed with a life expectancy
of 12 months or less they may access up to
50% of the base policy face amount
Target Premiums
on a 45 male StdNT 500K
Premium Solve to 100
Horizon ULC
5,137.57
Crown 100k base 4,340.10
Crown All Comp
4,749.36
Crown All Base
5,157.75
Advantage NLG
4,548.00
Vista Select
4,719.58
Vista Elite
5,405.00
Target Premium
3,750.57
1,582.00
4,749.36
7,910.00
4,550.00
5,930.00
8,240.00
Five Major Markets
Accumulation plans
1.Provides living benefits
2. Retirement plans
3. College funding
Guaranteed Death Benefit and Premium
Sales
Single Premium Sales
Rescue sales
Low Cost Death Benefits
Eight Sales Ideas
Two Types of Single Pay, Are They Better than
an Annuity?
Start Cheap, Educate, Retire, leave a Legacy
Be Your Own Banker!!
Missed Opportunity?
A Grandparent’s Choice
1035 Rescue of a dying policy with a loan.
Planning for a Specific Income using Life
Insurance
A Chicago Guarantee!
Single Pay, better than an Annuity?
Situation
– 62 year old female, preferred non tobacco
– Wants to convert a jumbo CD of $100,000
to an annuity.
– However would consider a permanent,
guaranteed
death benefit until age 100 to pass
on to her heirs.
– May want to withdraw funds in the future
Guaranteed Death Benefit
Automatic Death Benefit Extension
To 115.
Guaranteed Rate of Return
Guaranteed
D.B.
95% of cash value taken out
Life Protector
Rider
A Second Type of Single Pay
40 yr old male
Single Pay of $100,000
Buys Patriot/Crown Solution using the
CVAT.
Start Cheap, Educate and Retire,
and leave a Legacy
30 yr old man with a 3 yr old son
Needs $400,000 of life protection
Wants to have money 15 years from now
for college
Want to have a retirement plan.
Low cost
beginning
No tax outlay
$22,000 for 4 years
$65,000 tax free for 20 years.
Total input
Total outtake
Death benefit
In his nineties
Be your Own Banker
There are several methods to achieve this goal
This example shows how a 35yr. old man can
buy two luxury cars, in his life time, pay himself
back, and increases his retirement.
You can design the same, with an understanding
on how to create repayments, which most of
your competition can’t.
Two car loans
$115,000 tax
Free for 20 yrs.
Missed Opportunity?
A 35 yr old opts to pay interest only on a
$250,000 mortgage.
The cash flow savings, over a traditional
30 year fixed mortgage is $700/month.
At current projection, he will be able to pay
off his mortgage and generate retirement
income.
His Death Benefit is double his obligation.
Using Equity as a Tool
Some suggest that home equity earns a
Zero rate of return.
By using a interest only loan, a 43 yr old
man, borrows $250,000, and buys a SPIA
The SPIA generates $4,500/month for 5
years.
A Grandparent’s Choice
Grandparents are always looking to
provide their grandchildren with unique
gifts
Why not insure the mother after birth with
the grandparents annual gift exclusion.
Provides protection for the child and a
wonderful college fund.
A 1035 rescue of a dying policy
with a loan
• We have a 60 yr. old male who has a
$1,000,000 policy that has $200,000 of
cash value, but also has a $100,000 loan
against it.
• He would like to not pay any more
premium, but is worried about the policy
lapsing and owing tax.
• Could we help him with our new LPR?
A 1035
exchange for
$1,000,000 of
original
coverage
The cash value in the
exchange is $200,000 with a
loan of $100,000
The D.B. begins to
decline under the
weight of the loan
and mounting
interest
The policy will lapse
under the current
assumptions at age 85
However, by using
the new LPR, we
can rescue this 1035
exchange and
guarantee the policy
will never lapse!
Need Specific Income?
Today, the strongest need for planning is
for distribution, for retirement.
Wouldn’t be nice if we could determine the
desired monthly income, and plan for it?
Well, we almost can!!
By stating the desired monthly income as
an Annual, we can use a Minimum Death
Benefit, and determine the Premium
needed.
A Chicago Guarantee!
I received a call from a Chicago agent wanting a
guaranteed D.B. and Premium for a 43 year old
man, for a Million dollars.
After I ran the illustration, he asked me to show
him putting more money in.
He then asked, how many years his client would
have to pay at the new level to have the same
guarantees!
That was his worst case scenario, he than could
make a future decision to put addition premiums
based upon a future look at the S&P.
For Appointment & Product Support:
Brian Ballard
800/ 473-2850, ext.23 [email protected]