flm-0866ao (03/13) for insurance professional use only — not for distribution to the public...
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FLM-0866AO (03/13) FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866AO.1 (04/13) FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC
April 23, 2013
NationwideIUL Web Ex
Series
Introduction to Indexed UL: Part 1Taking the Fear out of Indexed UL
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Disclosure• Life Insurance issued by Nationwide Life Insurance Company and/or Nationwide Life and Annuity Insurance
Company.
• Guarantees are subject to the claims paying ability of Nationwide.
• As your clients' personal situations change (i.e., marriage, birth of a child or job promotion), so will theirlife insurance needs. Care should be taken to ensure this product is suitable for their long-term lifeinsurance needs. They should weigh any associated costs before making a purchase. Life insurance hasfees and charges associated with it that include costs of insurance that vary with such characteristics of theinsured as gender, health and age, and has additional charges for riders that customize a policy to fit their individual needs.
• Riders may be known by different names in different states, may not be available in every state and have an additional charge associated with them.
• Indexed universal life insurance policies are not stock market investments, do not directly participate in any stock or equity investments, do not receive dividend or capital gains participation. Past index performance of an index is no indication of future crediting rates.
• Not a deposit. Not FDIC or NCUSIF insured. Not guaranteed by the institution. Not insured by any federal government agency. May lose value.
• © 2013 Nationwide Financial Services, Inc. All rights reserved
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Nationwide YourLife® Indexed UL
S & P 500® is a trademark of Standard & Poor's and has been licensed for use by Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company. Nationwide YourLife® Indexed UL is not sponsored, endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes no representation regarding the advisability of investing in the Product.
NASDAQ®, OMX®, NASDAQ OMX®, NASDAQ-100®, and NASDAQ-100 Index® are registered trademarks of The NASDAQ OMX Group, Inc. (which with its affiliates is referred to as the "Corporations") and are licensed for use by Nationwide Life Insurance Company or Nationwide Life and Annuity Insurance Company. Nationwide YourLife® Indexed UL has not been passed on by the Corporations as to their legality or suitability. Nationwide YourLife® Indexed UL is not issued, endorsed, sold, or promoted by the Corporations. The Corporations make no warranties and bear no liability with respect to the product.
The "Dow Jones Industrial AverageSM" is a product of Dow Jones Indexes, the marketing name and a licensed trademark of CME Group Index Services LLC ("CME"), and has been licensed for use. "Dow Jones®", "Dow Jones Industrial AverageSM" and "Dow Jones Indexes" are service marks of Dow Jones Trademark Holdings, LLC ("Dow Jones") and have been licensed for use for certain purposes by Nationwide Life Insurance Company or Nationwide Life and Annuity Insurance Company. Nationwide YourLife® Indexed UL based on the Dow Jones Industrial AverageSM is not sponsored, endorsed, sold or promoted by CME Indexes, Dow Jones or their respective affiliates, and CME Indexes, Dow Jones and their respective affiliates make no representation regarding the advisability of trading in such product(s).
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• All competitive information is believed to be current as of January 2013 for NLG; June 2013 for IUL. Information was compiled from the latest company software. American General WinFlex Rev. 122012; Met Life 84.009; Protective 7.6.46; Prudential 43.00; Hartford 12.5.5; AVIVA 2.95.0.55; Penn Mutual Web Illustrator 1/8/13; Principal 10.18.15; Lincoln 16.0; Transamerica 16.7; Lincoln Benefit Life 5.29x; Genworth 6.53.116; Pacific Life 13.10.4777.24551; John Hancock 9.0.1 and Minnesota Life’s web based software. All information presented is reliable as at the date of comparison and Nationwide has made every effort to make sure it is reliable; however, it’s possible that there are differences between the products compared which are not reflected and/or of which we are unaware. For this reason, its completeness and accuracy cannot be guaranteed. These are mere hypothetical scenarios and not intended to represent any specific client or situation.
IMPORTANT BENCHMARKING
INFORMATION
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Agenda
• Indexed UL is here to stay
• Why you should be selling Indexed UL?
• Understanding Indexed UL – and keeping it simple!
• How Indexed UL compares to other UL’s
• Pieces & Parts of IUL: New Terms
• Most Common Crediting Method
• Applying Caps, Floor and Participation rate
• Ideal Client Profile
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Indexed UL is Here to Stay
Why You Can’t Ignore IUL:
• IUL - fastest growing individual life product*
• Low interest rates put pressure on insurance companies which impacts their Guaranteed Universal Life (GUL) offering
• IUL meeting client needs today
- No Lapse Guarantee
- Low Cost UL (solve for premium)
- Accumulation and Income
- No negative returns (down side protection)
• Don’t wait for your client to ask you about IUL
*LIMRA 4Q2012 US Individual Sales; Total Premium
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Why You Should be Selling IUL:
If You have Clients that Want:
• Guaranteed Death Benefit with opportunity for Cash Value growth
• Opportunity for higher interest rates credited
• Downside protection against market loss
• Cash Accumulation or Supplement Retirement Income
• Long Term Care Rider
If You Want:• Offer a Guaranteed Death Benefit where the Cash Values are not guaranteed to run out
• Offer potential for higher returns without the risk of negative returns
• Higher Target Premiums than typical Guaranteed UL with 2 yr Rolling Target Premiums
• Offer Policy Management Program to make sure policy stays on track
• Offer clients solution to help meet their LTC needs
Then Nationwide’s Your Life Indexed UL may be the solution
Important not all IUL’s in market place offer the features noted here
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Understanding Indexed UL
Product Comparison:
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What is IUL? Keep it Simple!
Indexed Universal Life is:
• Universal Life Policy
• Interest credited is based off performance of Underlying Index
Behind the Scenes:
Guaranteed UL
Accumulation UL
Current Assumption
UL
Indexed UL
Interest Credited
Subject to discretion of Insurance Company. New Money or Portfolio
Subject to discretion of Insurance Company. New Money or Portfolio
Subject to discretion of Insurance Company. New Money or Portfolio
Transparent: Based in part off of the performance of Underlying index
General Account Investment Strategy
Varies by company, Usually bonds
Varies by company, Usually bonds
Varies by company, Usually bonds
Varies by company, Usually Hedging strategy
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How Indexed UL with a No Lapse Guarantee Rider
Compares to Guaranteed UL:Male, Age 65, Non Tobacco, Level Pay, $1,000,000 Death Benefit No Lapse Guarantee Duration to age 100
What would you expect if Cash Surrender Values were being compared?
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How Indexed UL with a No Lapse Guarantee Rider
Compares to Current Assumption UL:
Product Premium
Interest Rate
GuaranteedNLG Duration
Target Premium
Rolling Target Premiums?
NationwideYourLife IUL
$4,632 N/A to guarantee
Age 80 $8,442 Yes
John HancockProtection UL
$4,657 5.20% Age 80 $4,683 No
AXAAthena UL
$7,976 3.00% Age 80 $5,965 No
Nationwide YourLife IUL
$6,816 N/A to guarantee
Age 90 $7,353 Yes
Male, Age 50, $500,000 Death Benefit Pay to age 80, Non Tobacco Preferred
Note: For Current Assumption products, the No Lapse Guarantee (NLG) duration is the maximum life expectancy solve based on current interest rates as of April 2013
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Pieces & Parts of Indexed UL
Industry Comparison: IUL & other UL’s
*Maximum interest rate applied subject to discretion of Insurance Company
Indexed UL Description Usually Sometimes All other Universal Life
Cap Rate Maximum interest rate credited
9% - 13% 14%, 20% 32%
Or Uncapped
N/A*
ParticipationRate
Percentage of performance rate applied - - used in calculation for credit
100% 15% - 150% N/A
Underlying Index
One or more market indexes
S&P 500® DJIA®, NASDAQ -100®, Hang Seng®, Euro Stoxx 50®, Barclays®, Russell 2000®,
N/A
Segment Maturity
End of term where indexed interest is credited
1 year 2, 3, 5 yrs N/A
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Pieces & Parts of Indexed UL
Industry Comparison: IUL & other UL’sIndexed UL Description Usually Sometimes All Other
Universal Life
Guaranteed Floor
Minimum interest rate credited even if underlying index was negative
0% 1% or 2% Guaranteed Interest Rate
Guaranteed Cap
Minimum percentage company can reduce the Cap rate to
2% or 3% 0% - 4% N/A
Guaranteed Participation
Minimum percentage company can reduce the Participation rate to
100% 55% to 150% N/A
Guaranteed Death Benefit
Guarantees subject to various premium requirements
No Guarantee
Varies by productCould be from age 80 - 120
Varies by product
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Example of Most Common Crediting
Method
Question: If IUL product has a 12% Cap rate, then what rate would be credited?
Annual Point to Point: Measuring 2 Points in Time Index growth is equal to the difference between the index beginning value and index ending value. The difference is divided by the index beginning value.
#1 At the Beginning of the Period: The underlying index value is recorded. #2 At the End of the Period: The underlying index value is recorded. If the index is now higher, the policy owner will earn interest. If the index stays flat or declines, cash value is still credited with a minimum guaranteed interest (floor) which could be 0%.
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Example: Applying Cap, Floor &
Participation RateExample: 140% Participation, 12% Cap and 0% Floor
What if You Assume: 100% Participation with a 12% Cap and 0% Floor?
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Ideal Client Profile
Nationwide’s YourLife IUL may be a Good Fit for Your Clients:
• Low Cost alternative to UL with opportunity for higher crediting
• Guaranteed Death Benefit with optional No Lapse Guarantee Rider
- (Extended Death benefit Guarantee Rider) - Nationwide’s Policy Management Program for Death Benefit Guarantee
• Accumulation and Income – Insurance Based Retirement Plans - Nationwide’s Policy Management program for Income - Nationwide’s Policy Management program for 2/1 switch
• Long Term Care Rider – optional LTC rider, indemnity style
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What we didn’t cover today:
IUL Part 2: Learning To Embrace IUL May 21, 2013
IUL Part 3: Commonly Misunderstood Components of IUL June 25, 2013
IUL Part 4: Advanced Planning Applications of IUL July 23, 2013
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QUESTIONS?