index annuities and income riders
DESCRIPTION
Index Annuities and Income Riders. Retirement Planning in the 21st Century or These Aren’t Your Fathers’ Annuities. 1930 - 2008. He – 62 She – 30. He – 63 She – 37. Rod Stewart & Penny Lancaster. American Gothic. Retire. Re-tire, noun: - PowerPoint PPT PresentationTRANSCRIPT
For internal use only. Not for use with the general public.
Retirement Planning in the 21st Century
or
These Aren’t Your Fathers’ Annuities
Index Annuities and Income RidersIndex Annuities and Income Riders
page 3
Retire
Re-tire, noun:
To withdraw, or go away or apart, to a place of privacy, shelter, or seclusion: He retired to his study
To go to bed: He retired at midnight
To withdraw from office, business or active life, usually because of age: to retire at the age of 60
To fall back or retreat in an orderly fashion and according to plan, as from battle, an untenable position, danger, etc.
To withdraw or remove oneself: After announcing the guests, the butler retired.
Source: www.dictionary.com
page 6
Retirement – Are we ready?
Brinker Retirement Indicator Survey, March 2008
“TYPICAL” RETIREMENT AGE AN ARCHAIC NOTION
• “Do you think the concept of a ‘typical’ retirement age is still relevant in the US today?
– 86% of financial advisors weighed in with a resounding “NO”
• When asked why:
– 59% said “traditional retirement is just an outmoded concept; people will work as long as they feel physically and mentally able”
– 17% said “serious retirement saving began too late for most Americans”
– 8% said “people are living longer, therefore they’re working longer”
• When asked if their clients expect to work past 65:
– 54% said Yes
– 46% said No
page 7
Retirement – Are we ready?
Americans view financial risk adversely. Majority of working and retired Americans say they are most interested in financial products that yield some minimum return without risk
Among already retired Americans, 81% say their standard of living has decreased or stayed the same
85% of working Americans overwhelmingly feel their living standards will remain the same or decrease
–75% of retirees report that their retirement income is lower than their most recent salary
–Workers in all age groups think Social Security is in serious trouble
Axa – Equitable survey Senior Market Advisor, April 2008
page 8
69% worry about OUTLIVING financial resources
80% are concerned about having ADEQUATE INCOMEduring retirement
Boomers will collectively LIVE LONGERLIVE LONGER than any other generation
Leading Edge Boomers; Rethinking Retirement and Exploring Annuities.Harris Interactive Inc., for Guardian Life Insurance Company of America.
Among Leading Edge Boomers
For agent use only.
page 9Source: Annuity 2000 Mortality Table. Figures assume client is in good health.
On average, what’s the life expectancy of today’s 65-year old?
LONGEVITY RISK: HOW LONG WILL YOUR CLIENTS NEED INCOME?
Male Age 65
FemaleAge 65
CoupleAge 65 92
88
85
page 10
MaleAge 65
FemaleAge 65
CoupleAge 65
LONGEVITY RISK: HOW LONG WILL YOUR CLIENTS REALLY NEED INCOME?
9494
9797
1 out of 4 will outlive this age
9292
1 out of 2 will outlive this age
But their plan will fail 50% of the time—if they play the averages!
92
88
85
Source: Annuity 2000 Mortality Table. Figures assume client is in good health.
page 11
48% were not sure of what their best choices were forsaving for retirement
41% admitted they were not completely confident that their retirement savings and investments were diversified sufficiently
Many still shaken by “recent” stock market turmoil-57% concerned that stock market volatility would DECREASE their retirement INCOME.
Leading Edge Boomers; Rethinking Retirement and Exploring Annuities.Harris Interactive Inc., for Guardian Life Insurance Company of America.
Among Leading Edge Boomers
For agent use only.
For internal use only. Not for use with the general public.
National Underwriter Life & Health December 18/25, 2006
For internal use only. Not for use with the general public.
Leading Edge Boomers; Rethinking Retirement and Exploring Annuities.Harris Interactive Inc., for Guardian Life Insurance Company of America.
page 15
71% liked the idea of a retirement vehicleThat provides a steady stream of income
Once they retire…
And 69% liked the idea of a vehicle that GUARANTEES THE PRINCIPAL !!
FOR INSTANCE…When asked their opinion of certain
Product benefits……
Leading Edge Boomers; Rethinking Retirement and Exploring Annuities.Harris Interactive Inc., for Guardian Life Insurance Company of America.
Boomers
page 16
Boomers are attracted to investments with certain Guaranteed features
but don’t always recognize That they can get those features by buying…
ANNUITIES !
Leading Edge Boomers; Rethinking Retirement and Exploring Annuities.Harris Interactive Inc., for Guardian Life Insurance Company of America.
Boomers
page 17
86%86% of leading Boomers DON’T ownAnnuities
70%70% say they have not thought of buying anAnnuity because…
YET…YET…The study found…
Leading Edge Boomers; Rethinking Retirement and Exploring Annuities.Harris Interactive Inc., for Guardian Life Insurance Company of America.
They don’t know enough about the product !!!They don’t know enough about the product !!!
Boomers
page 18
Fixed Indexed Annuities for Boomers?
Steady Stream of Income
Upside Potential
CONTROL of retirement savings
Safety of Principal (assumes no withdrawals)
Safety of the Income
CONTROL of the Income
For internal use only. Not for use with the general public.
Your ToolboxRecent Launches and the 1st Quarter 2008
For internal use only. Not for use with the general public.
Income Select Platinum
•12 / 12 / 12 / 11 / 10 / 9 / 9 / 7 / 6 / 4 / 0
•Simple - 3 Interest Crediting Strategies
•BIG rates: +1% Fixed, +2.25% Cap, +10% Par
For agent education only. Not intended to solicit annuity or life sales to public. Income Select Platinum [form FPIAR (10/07) or state variation] is issued by American Investors Life Insurance Company, Inc., Topeka, KS. Product features, limitations and availability vary by State; see disclosure for details.
For internal use only. Not for use with the general public.
•Addition to the Income Series
–Industry-Leading Liquidity
–Innovative Crediting Strategies
–Income Edge/Income Edge Plus Withdrawal Rider
•Walk-away 10-YEAR 10% Premium Bonus Product
–Credited day 1, vests over 10 years
–Competitive commission
For agent education only. Not intended to solicit annuity or life sales to public. Income Select Bonus [form FPIAX (1/08) or state variation] is a fixed indexed annuity issued by American Investors Life Insurance Company, Inc., Topeka, KS. Product features, limitations and availability vary by State; see disclosure for details.
Income Select Bonus
For internal use only. Not for use with the general public.
Product Symmetry
Income Select Plus
5% Bonus
Core Product
Income Select Platinum
No Bonus
Higher Crediting
Income Select Bonus
10% Bonus
Lower Crediting
Choices for YOUR Clients!
For internal use only. Not for use with the general public.
Income Edge Rider (Rev. 09/07)
•Guarantees lifetime income without annuitization!
•Prior to any withdrawals under the Income Edge benefit, the Income Account Value is guaranteed to increase at least 6% per year for the first 10 years.
•Three Choices for Withdrawals–Free withdrawals–Elect “Income Withdrawals”–Elect “Lifetime Income Withdrawals”
•Automatic Step-ups
For internal use only. Not for use with the general public.
–Issue Ages 40-85^
–105% Income Account Multiple
–Immediate Rider Withdrawals^
–Percentage ONLY 0.50% less for Joint Annuitants
–Non-natural Owners
–Rider charge begins immediately
^ Must be age 50+ for Lifetime Income W/ds
Income Edge Rider (Rev. 09/07)
For internal use only. Not for use with the general public.
Income Select Series
Non-Bonus Annuities–5 Year Withdrawal Schedule
• Income Select 5
–7 Year Withdrawal Schedule• Income Select 7
–10 Year Withdrawal Schedule• Income Select 10• Income Select Platinum
*May not be available in all states, check for your state’s approval on www.Aviva.com/agents
For internal use only. Not for use with the general public.
Income Select Series
•Bonus Annuities–10 Year Withdrawal Schedule
• Income Select Plus – 5%• Income Select Bonus – 10%
*May not be available in all states, check for your state’s approval on www.Aviva.com/agents
For internal use only. Not for use with the general public.
Premium Limits
•Minimum Initial Premium–$5,000 •Maximum Initial Premium (w/o home office approval)–$1,000,000 •Additional Premiums–$1,000 Minimum–$100,000 Maximum in any 12-month period
All contracts are Flexible Premium Deferred Fixed Indexed Annuities
For Agent Use Only – not for use with the General Public.
Additional premiums are automatically deposited in to the Fixed Account if not made on a contract anniversary and may be allocated to indexed strategies at contract anniversary.
For internal use only. Not for use with the general public.
Premium Bonus:
•10% applied for all premiums credited in the first two policy years
•Premium Bonus Recapture Charge Rate Schedule
10, 10, 10, 10, 8, 7, 6, 5, 4, 2, 0%
•Bonus is fully vested upon death of annuitant, as well any free withdrawals—Confinement, Home Health Care and Terminal Illness Waivers, 10% or 20% free, RMDs
For Internal and Agent Education Only ~ Not for use in solicitation to the general public.Bonus annuities typically include lower cap rates, higher spreads or other restrictions that are not included in similar annuities that don't offer a premium bonus feature.
Income Select Bonus
For internal use only. Not for use with the general public.
• 1 Fixed Strategy (1-Year Guar.)
• 7 Indexed Strategies– 1-Year Point-to-Point Participation Index (No Cap)– 1-Year Point-to-Point Index– 1-Year Uncapped Average Index– 1-Year Monthly Cap Index– 1-Year Uncapped Multiple Index – 1-Year Multiple Index (No Spread)– 1-Year Average Index (No Spread)
All indexed strategies lock-in and credit any index-linked interest credits each year.
Interest Crediting Strategies
Market Indices do not include dividends paid on the underlying stocks, and therefore do not reflect the total return of the underlying stocks; neither an Index nor any market-indexed annuity is comparable to a direct investment in the equity markets. Indexed annuities are not registered securities or stock market investments and do not directly participate in any stock or equity investments. Clients who purchase MultiChoice Income Series annuities are not directly investing in a stock market index.
For internal use only. Not for use with the general public.
Issue Ages
0 – 80 – no commission reduction for older ages
10-Year Withdrawal Charge Schedule
For Internal and Agent Education Only ~ Not for use in solicitation to the general public.Withdrawals in excess of the free amount are not credited with index interest for that term, are subject to withdrawal charges, premium bonus recapture charges and a market value adjustment, which are also imposed retroactively if the contract is surrendered within 12 months of a free withdrawal.
Year 1 2 3 4 5 6 7 8 9 10 11+
W/d Charge Schedule
12 12 12 11 10 9 8 7 6 4 0%
Income Select Bonus
For internal use only. Not for use with the general public.
Liquidity Options
• 10% Free Withdrawal – Beginning in Year 1
• 20% Cumulative Withdrawal – If withdrawal was not taken in the previous contract
year
• Early Income Option – SPIA conversion option after year 1
• Next Generation Income Edge or Income Edge Plus Optional Lifetime Withdrawal Rider
For Internal and Agent Education Only ~ Not for use in solicitation to the general public.Withdrawals in excess of the free amount are not credited with index interest for that term, are subject to withdrawal charges, premium bonus recapture charges and a market value adjustment, which are also imposed retroactively if the contract is surrendered within 12 months of a free withdrawal.
For internal use only. Not for use with the general public.
Confinement Waiver
• Waives withdrawal charges in the event of confinement to a qualified care facility
• 100% of Accumulated Value Available after Year 1
• Requires 60 Consecutive Days of Confinement
• No Age Restrictions– Other restrictions may apply
For Agent Use Only – not for use with the General Public.
May not be available in all States. In Texas, this benefit is available in the first year; waiver not available in Massachusetts.
For internal use only. Not for use with the general public.
Terminal Illness Waiver
• Waives withdrawal charges in the event of terminal illness
• 100% of Accumulated Value Available after Year 1
• Requires Statement from Doctor stating that death will result within one year of diagnosis
• No Age Restrictions– Other restrictions may apply
For Agent Use Only – not for use with the General Public.
Waiver not available in Massachusetts; in Texas, waiver is available in the first year; in Pennsylvania, waiver is referred to as the Terminal Condition Waiver.
For internal use only. Not for use with the general public.
Home Health Care Waiver
• Waives withdrawal charges in the event of qualifying home health care
• 20% of Accumulated Value available annually after year 1
• Requires Statement from Doctor regarding inability to perform 2 of 6 activities of daily living (ADLs)
• No Age Restrictions– Other restrictions may apply
For Agent Use Only – not for use with the General Public.
May not be available in all States. In Texas, this benefit is available in the first year.
For internal use only. Not for use with the general public.
Death Benefit
• Full Accumulated Value Upon Death of Annuitant for All Ages
• No Commission Chargeback Upon Death
For Agent Use Only – not for use with the General Public.
For internal use only. Not for use with the general public.
Premier Guaranteed Minimum Withdrawal Rider for Life
We are the original!
We have now made it even better!
Income Edge Rider [form AIR (Rev. 09/07) or state variation], an optional Rider for which an annual Premium is charged, is issued by American Investors Life Insurance Company, Topeka, KS. Product features, limitations, and availability vary by state.
For internal use only. Not for use with the general public.
Income Edge & Income Edge Plus
•Now Two Great Choices to Offer Your Clients
For internal use only. Not for use with the general public.
Choice #1
Income Edge Rider (Rev. 09/07)
• 105% Income Account Multiple
• 6% Guaranteed Growth on the Income Account Value, prior to withdrawals
105% is applied to the Adjusted Accumulated Value and Income
Account Value for all Premium; the Accumulated Value of the Base
Contract is applied at 100%.
For internal use only. Not for use with the general public.
Guaranteed Accumulation
Years of Income Deferral
Income Account Value
1 $111,300
2 $117,978
3 $125,056
4 $132,560
5 $140,514
6 $148,945
7 $157,881
8 $167,354
9 $177,395
10 $188,039
Assumes 100% allocated to the Indexed Strategies and no withdrawals. Rider withdrawals will stop the 4% guaranteed growth in the Income Account Value.
$100,000 Premium 6% Guaranteed
AccumulationRegardless of Actual Index Performance
For internal use only. Not for use with the general public.
For Agent Use Only ~ not for use in advertising to the public.
Initial Premium $100,000$100,000
Income Select Bonus both with a 10% Premium Bonus $110,000$110,000
105% Indexed Strategy Income Account Percentage $115,500$115,500*
*Income Account Value
Income Edge Rider (Rev. 09/07)
For internal use only. Not for use with the general public.
Choice #2
• Income Edge Plus Rider
• Income Doubles for Confinement
• Wellness Benefits: Mayo Clinic Health Risk Assessment, Personal Health Management Portal, Access to As Mayo 24-hour Nurse Line, Quarterly Mayo Clinic newsletter and calendar – with Agent contact info
• 7.2% Guaranteed Growth on the Income Account Value, prior to withdrawals
See contract for qualifying confinement criteria.
For internal use only. Not for use with the general public.
Income Edge Plus Income Account Value
Years of Income Deferral Income Account Value
No Wait $100,000
1 $107,200
2 $114,918
3 $123,193
4 $132,062
5 $141,571
6 $151,764
7 $162,691
8 $174,405
9 $186,962
10 $200,423
$100,000 Initial Premium 7.2% Guaranteed Interest for the First 10 Contract Years
Amounts assume $100,000 Initial Premium, no rider Withdrawals, no additional Premium, and a restart of the Accumulation Years after the 10th Contract Year. Rider Withdrawals stop the guaranteed growth.
For internal use only. Not for use with the general public.
Restart – Accumulation Years
• Step-up of Income Account Value to actual Accumulated Value if indexed interest credits outpace 6% or 7.2% guaranteed growth– Available on or after 5th contract anniversary
• Increased Income Account Value also increases the guaranteed income distribution amount
• Upon restart, Rider benefit is based on the current charge at the time of restart.
• Re-starting begins a new 10-year accumulation period– Must wait at least 5 years between “Restarts”
Restart initiates a new accumulation phase with the 6% guarantee in the Income Account Value for a new 10-year period. In addition to extending the guaranteed period, the Restart locks-in any indexed interest credits above the 4% guarantee in the Income Account Value.The restart is no longer available after taking income under the rider. If the cost of the rider is higher at the time of a Restart, it may be increased to the current charge at the time of Restart, but is guaranteed to never be more than 1.0%. The charge will never decrease even if the charge is lower at the time of restart. A Restart will not cause the withdrawal charge schedule to start over.
Power of RestartImpact on Income Account Value
Years of Deferral Income Account Value (6% Growth Rate) Hypothetical Accum. Value
1 $111,300 $108,000
2 $117,978 $115,560
3 $125,056 $124,804
4 $132,560 $133,540
5 $140,514 $144,223
Restart Income Account Value Accumulation Based on $144,223
Years of Deferral Income Account Value (6% Growth Rate) Hypothetical Accum. Value
6 $152,877 $144,223
7 $162,049 $149,000
8 $171,772 $152,000
9 $182,078 $160,000
10 $193,003 $172,800
11 $204,583 $186,625
12 $216,858 $200,620
13 $229,869 $230,754
14 $243,662 $230,754
15 $258,282 $245,753
Hypothetical example assumes $100,000 initial premium and varying annual interest credits and no withdrawals. This example is for illustration purposes only and is not indicative of past, nor intended to predict future performance of the annuity. Use of alternate premium and rate assumptions will produce different results.
For internal use only. Not for use with the general public.
Immediately at Issue!• Must be > Age 50 for Lifetime Income Withdrawals.• Income Withdrawals can be elected at any age.
• No longer 1-year waiting period for Rider withdrawals!
For Agent Use Only ~ not for use in advertising to the public.Taxable amounts withdrawn prior to 59½ may be subject to a 10% IRS penalty. Withdrawals in excess of the free amount are not credited with index interest for that term, may forfeit potential interest credits, may be subject to withdrawal charges and a market value adjustment. Withdrawal charges and MVA are imposed retroactively if the contract is surrendered within 12 months of a free withdrawal (not applicable to the Income Select 10 or Income Select Platinum).
Rider Income Withdrawal Availability
page 53
Options for Distribution 4 Choices
Take normal distributions without starting Rider
Annuitization:
• Total loss of control over the asset for the client
• Irrevocable option
Elect the Income Withdrawal under the rider and receive up to 8% annually of the Income Account Value until it reaches zero
Elect Lifetime Income Withdrawal receive Annual Guaranteed Income for Life
• Maximum control over the asset for the client
Income Withdrawal percentage is 4% if attained age 50 and increases by 0.5% every five years until reaching the maximum 8% upon attained age of 90. Amount is then guaranteed as long as there are no excess withdrawals. Rider withdrawals stop the 4% guaranteed growth in the Income Account Value.
page 54
Single Withdrawal PercentagesHow is the Income Determined?
Annuitant’s Age at Time of Election
Single Annuitant Income Percentage
50 - 54 4.00%
55 - 59 4.50%
60 - 64 5.00%
65 - 69 5.50%
70 - 74 6.00%
75 - 79 6.50%
80 - 84 7.00%
85 - 89 7.50%
90+ 8.00%
page 55
Joint Withdrawal PercentagesHow is the Income Determined?
Youngest Joint Annuitant Age at Time of Election
Joint Annuitant Income Percentage
50 - 54 3.50%
55 - 59 4.00%
60 - 64 4.50%
65 - 69 5.00%
70 - 74 5.50%
75 - 79 6.00%
80 - 84 6.50%
85 - 89 7.00%
90+ 7.50%
For internal use only. Not for use with the general public.
Automatic Step-UpDistribution
• On each contract anniversary following the first elected withdrawal, customers are eligible for an automatic step-up
• Annual benefit will be “stepped-up” (increased) if the “Adjusted” Accumulated Value exceeds the Income Account Value at the time
• Customers must notify issuing company if increase is not desired
Assumes 100% of the premium is allocated to the Indexed Strategies and no withdrawals.Income Withdrawal steps-up only if Accumulated Value exceeds the Income Account Value at the time that Income Withdrawals began.
For internal use only. Not for use with the general public.
Automatic Step-Up $100,000 Initial Premium, 70 yr. old male
Hypothetical example assumes $100,000 initial premium and varying annual interest credits as shown. The annual Lifetime Income Withdrawal amount is increased in years 2 and 5 since the Accumulated Value at the end of those contract years is greater than the Income Account Value. This example is for illustration purposes only and is not indicative of past, nor intended to predict future performance of the annuity. The use of alternate premium and rate assumptions could product significantly different results.
Year IAVAccumulated
Value
Interest Credits
Accumulated Value
Lifetime Income Withdrawal
Election $100,000 $100,000 $6,000
1 $94,000 5.0% $98,700 $6,000
2 $101,970 10.0% $101,970 $6,118
3 $95,852 0.0% $95,852 $6,118
4 $89,734 7.0% $96,015 $6,118
5 $103,381 15.0% $103,381 $6,203
6 $97,178 0.0% $97,178 $6,203
7 $90,976 5.0% $95,524 $6,203
8 $84,773 8.0% $96,467 $6,203
9 $78,570 0.0% $90,264 $6,203
10 $72,367 10.0% $92,468 $6,203
For internal use only. Not for use with the general public.
Death Benefit
• Spousal continuation benefits provided by the base contract will not be adversely affected by the Income Edge benefit
• Upon the death of the owner, if the surviving spouse is age 50 or older, the Income Edge benefit will also continue.
Surviving spouse must be age 50 or older at that time, the sole primary beneficiary and elected withdrawals not have started prior to annuitant's death.
For internal use only. Not for use with the general public.
Death Benefit
• If withdrawals under the Income Edge benefit have already been elected, the beneficiary is eligible to receive:
• Current Accumulated Value in a lump sum;
or
• Remaining Income Account Value in a series of payments up to 7.0% per year – Based on the beneficiary’s age at the time of step-in until
the amount is paid in full.*
The beneficiary, including a spousal beneficiary, does not have the option to elect Lifetime Income Withdrawals.
*7.5% ages 85-89, and 8.0% ages 90+
For Agent Use Only ~ not for use in advertising to the public.
Income EdgeIncome Edge Income Edge Income Edge PlusPlus
Issue Ages 40 – 85
Guaranteed Income Account Interest Rate
6% 7.2%
Indexed Strategy Income Account Percentage
105% 100%
Fixed Allocation Percentage 105% 100%
Wellness Benefits No Yes
Income Withdrawal Multiplier (2)
Upon Confinement0
2
(after 1-Year Qualification
Waiting Period)
Rider Charge 40 bps annually 5050 bps annually
Income Withdrawal Available Immediately (no minimum age)
Lifetime Income Withdrawal Available Immediately (if attained age 50)
Withdrawal Percentages - Joint Annuitants
0.50% less than single
Non-Natural Owner Yes
For internal use only. Not for use with the general public.
DisclosureFor internal and agent use only - not for use with the public.For internal and agent use only - not for use with the public.
Income Edge [form AIR Rev.(09/07) or state variation], an optional rider for which an annual premium is charged, and the Income Select Bonus [form FPIAX (02/08) or state variation], are issued by American Investors Life Insurance Company, Topeka, KS. Product features, limitations and
availability vary by State.During the Withdrawal Charge period, any withdrawals in excess of the free amount are not credited with index interest for that term, are subject to
withdrawal charges, premium bonus recapture charges and a market value adjustment, which are also imposed retroactively if the contract is surrendered within 12 months of a free withdrawal. Excess withdrawals may result in the loss of principal if taken during the first 10 years of the
Contract and may be subject to a 10% penalty tax assessed by the IRS on any withdrawal taken prior to age 59½.This presentation only provides product highlights—please refer to the product disclosure for information regarding exclusions,
limitations, reductions of benefits and terms, including costs and complete details of coverage.
Market Indices do not include dividends paid on the underlying stocks, and therefore do not reflect the total return of the underlying stocks; neither an Index nor any market-indexed annuity is comparable to a direct investment in the equity markets. Indexed annuities are not registered securities or
stock market investments and do not directly participate in any stock or equity investments.Bonus annuities typically include lower cap rates, higher spreads or other restrictions that are not included in similar annuities that don't
offer a premium bonus feature.