Manulife Global Indexed UL SELLERS GUIDE

Transcription

1 Manulife Global Indexed UL SELLERS GUIDE Insurance products are issued by The Manufacturers Life Insurance Company (Bermuda Branch). For Distributor/Financial Representative use only. Not for use with the public. MANULIFE BERMUDA

2 Table of Contents Key Advantages and Opportunities 1 Why Should I Offer MGIUL to My Clients? 2 MGIUL s Top Selling Points 2 MGIUL s Target Market 3 How MGIUL Works 3 A Competitive Fixed Account 4 Cash Value Case Study Using the Fixed Account Option 4 Cash Value Enhancement (CVE) Added Flexibility 5 Cash Value Case Study Using Cash Value Enhancement (CVE) Rider 5 Index Appreciation Account Opportunity for More 6 Cash Value Case Study Using the Index Appreciation Account Option 6 Index Appreciation Account Performance 7 Historical Look-Back Rate Easy for your clients to understand 9 Historical Look-Back Period 9 What About Financing? 10 Illustrations and Cash Surrender Value Letters are easy to use 10 Accessing Policy Values 11 You Have Questions, We Have Answers 12

3 Manulife Global Indexed UL (MGIUL) is a flexible premium universal life policy, tailored exclusively for the international high-net-worth market. It is designed to be among the most competitive life insurance products in the industry, with affordable premiums and strong cash value accumulation potential. MGIUL, like traditional universal life products, offers a Fixed Account which provides high-net-worth (HNW) clients all the conventional benefits that are so popular in the universal life marketplace today. MGIUL s unique asset strategy also offers these clients the opportunity to earn interest linked to the performance of three geographically and economically diverse financial indices* in its Index Appreciation Account. The Index Appreciation Account is unique because it offers higher upside potential while still protecting the policy s cash value from downside market risk. Even though the Index Appreciation Account is designed to take advantage of the upside potential of equity markets, MGIUL is still defined as a universal life policy with underlying guarantees and a 0% minimum floor on the Index Appreciation Account. Key Advantages and Opportunities Unique Opportunity for Growth Competitive Fixed Account Interest credited daily: Current crediting rate 3.80% Guaranteed crediting rate 2.00% Current crediting rate guaranteed for the first policy year Safe and steady growth Strong guarantees Unique Index Appreciation Account Additional universal life account option offering interest crediting linked to the performance of three diverse financial indices 1 Higher upside potential Guaranteed 0% floor eliminates market losses Guaranteed 100% Participation Rate Cumulative Guarantee Regardless of the policy s premium allocations, MGIUL s 2% Cumulative Guarantee ensures that even under the worst of market conditions, clients are assured that their policy value will continue to grow. The Cumulative Guarantee applies at time of surrender. 1. S&P 500, Hang Seng Index and MSCI EAFE Manulife Global Indexed UL 1

4 Why Should I Consider Offering this Product to My Clients? Premiums Attractive to clients looking for lower cost opportunities. Cash Values A policy with cash value growth potential will be important to your clients should their insurance needs or cash flow change in the future. New! Optional Cash Value Enhancement (CVE) rider reduces the policy s Surrender Charge. Competitive Edge Understanding the value of MGIUL will help you win more sales from the competition. Diversification Diversifying your book of business will improve your sales prospects in the future. Adaptability A new tool in your sales arsenal allows you to find the right product for your clients needs. MGIUL s Top Selling Points 1 Lower 2 Competitive 3 Unique 4 Offers minimum premiums and higher cash value growth potential than competitor s current assumption and guaranteed UL products. Fixed Account credits interest daily with a 2.00% minimum guaranteed crediting rate for all policy years (the 3.80% current rate guaranteed in year 1). Index Appreciation Account offers even greater growth potential, earning interest linked to the performance of three economically and geographically diverse financial indices: S&P 500 Index, Hang Seng Index and MSCI EAFE Index. The policy does not directly participate in any stock or equity investments. Product Flexibility, including Return of Premium(ROP) Rider and Cash Value Enhancement (CVE) Rider. 5 Cumulative 6 Upside 7 Super 8 Among 9 Backed Guarantee ensures a minimum average annualized rate of return of 2.00% over the life of the policy, upon surrender. Potential and Downside Protection while MGIUL takes advantage of the upside potential in the market, it also provides the downside protection of a guaranteed minimum 0% floor in the Index Appreciation Account, meaning the policy will never realize negative market returns. Preferred Underwriting Classifications for HNW Clients in nearly all countries currently underwritten. 2 the most Competitive Targets in the industry. by the Financial Strength of Manulife Financial. 2. Super Preferred available to all High-Net -Worth applicants in all Residency Code Countries; some exclusions apply including Cambodia and some cities in China. 2 Manulife Global Indexed UL

5 MGIUL s Target Market High-Net-Worth Clients ages Clients looking for a competitive crediting rate, and lower premiums Clients interested in higher cash value accumulation potential Clients seeking strong guarantees Clients who need a reputable company where financial strength is important Clients who are optimistic about the market but do not want to actively manage or monitor their investments How MGIUL Works Premium Less Premium Charge Less Policy Charges Less Policy Distributions (Loans & Withdrawals) Index Appreciation Account S&P 500 Hang Seng Index MSCI EAFE Earns Interest at Segment Maturity POLICY VALUE Fixed Account Earns Interest Daily Note: The Index Segment Interest Credit proceeds are calculated and earned at Segment Maturity only. If the policy terminates prior to a Segment Maturity Date, any Segments which have not matured will not earn an Interest Credit. Death Benefit Manulife Global Indexed UL 3

6 Let s take a closer look A Competitive Fixed Account As crediting rates on more traditional UL polices continue to decline throughout the industry, MGIUL maintains a strong 3.80% rate on its Fixed Account option. Cash Value Case Study Using the Fixed Account Option Male, Age 45, $20,000,000, Competitor Best Class Non Smoker, Indonesia Resident Company/ Product* Transamerica UL Preferred NS Sun Life Core Preferred Select NS AIA HK WP 3 Prestige NS MGIUL Standard NS MGIUL Standard Plus NS MGIUL Preferred NS MGIUL Super Preferred NS Premium to Endow Break Even Surrender Charge Day 1 CSV % EOY 1 Guaranteed CSV % $5,599,718 Year 6 15 Years 81% 84% $5,746,547 Year 8 15 Years 84% 86% $5,997,804 Year 6 15 Years 84% 86% $6,234,552 Year 7 9 Years 81% 84% $6,054,008 Year 6 9 Years 86% 88% $5,719,556 Year 6 9 Years 87% 89% $5,594,876 Year 6 9 Years 86% 88% * MGIUL illustrated with a 100% allocation to the Fixed Account option at 3.80%. Sun Life illustrated at 3.60%, AIA at 3.80%, and Transamerica at 4.20%. Competitor information is current and accurate to the best of our knowledge as of March The data shown is taken from various company illustrations. Current interest rates may be different for each company and may not be guaranteed. The comparisons in this communication are of different products which vary in premiums, rates, fees, expenses, features and benefits. These comparisons cannot be used with the public and complete personalized policy illustrations for each representative company must be presented or discussed with your clients. Please have your clients consult with their professional advisors to find out which type of life insurance is more suitable. 4 Manulife Global Indexed UL

7 Cash Value Enhancement (CVE) Added Flexibility The Cash Value Enhancement (CVE) rider enhances the policy s early cash surrender value by reducing the surrender charges in the first five policy years. The CVE rider preserves capital and offers added flexibility for your clients. Cash Value Case Study Using Cash Value Enhancement (CVE) Rider Male, Age 45, $20,000,000, Competitor Best Class Non Smoker, Indonesia Resident Company/ Product* Premium to Endow Break Even Surrender Charge Day 1 CSV % EOY 1 Guaranteed CSV % Transamerica UL Preferred NS Sun Life Classic Preferred Select NS MGIUL Super Preferred NS $5,599,718 Year 4 15 Years 94% 97% $6,405,394 Year 5 15 Years 94% 96% $5,606,806 Year 6 9 Years 92% 94% *MGIUL illustrated with a 100% allocation to the Fixed Account option at 3.80%, Sun Life illustrated at 3.60%, and Transamerica at 4.20%. Competitor information is current and accurate to the best of our knowledge as of March The data shown is taken from various company illustrations. Current interest rates may be different for each company and may not be guaranteed. The comparisons in this communication are of different products which vary in premiums, rates, fees, expenses, features and benefits. These comparisons cannot be used with the public and complete personalized policy illustrations for each representative company must be presented or discussed with your clients. Please have your clients consult with their professional advisors to find out which type of life insurance is more suitable. Manulife Global Indexed UL 5

8 Index Appreciation Account Opportunity for More The Index Appreciation Account offers the opportunity for higher upside potential cash value accumulation than a traditional UL policy, while still protecting the policy s cash value from downside market risk as the crediting rate will never be less than zero. The Index Appreciation Account is composed of three capped indexed accounts the S&P 500 Indexed Account, the Hang Seng Indexed Account and the MSCI EAFE Indexed Account. Cash Value Case Study Using the Index Appreciation Account Option Residency Code A+, Male, Age 45, $20,000,000, Competitor Best Class Non Smoker Company/ Product* Premium to Endow Break Even Surrender Charge Day 1 CSV % EOY 1 Guaranteed CSV % Sun Life Core Preferred Select NS AIA HK WP 3 Prestige NS Transamerica UL Select NS MGIUL (50/50 IAA Allocation) Standard NS MGIUL (100% IAA Allocation) Standard NS $4,835,869 Year 7 15 Years 82% 85% $5,512,526 Year 7 15 Years 84% 86% $5,007,811 Year 7 15 Years 81% 84% $4,181,258 Year 5 9 Years 84% 87% $3,537,261 Year 5 9 Years 83% 86% * MGIUL illustrated with an assumed Index Appreciation Account crediting rate of 5.30% and Fixed Account option at 3.80%. Sun Life illustrated at 3.60%, AIA at 3.80% and Transamerica at 4.20%. Competitor information is current and accurate to the best of our knowledge as of March The data shown is taken from various company illustrations. Current interest rates may be different for each company and may not be guaranteed. The comparisons in this communication are of different products which vary in premiums, rates, fees, expenses, features and benefits. These comparisons cannot be used with the public and complete personalized policy illustrations for each representative company must be presented or discussed with your clients. Please have your clients consult with their professional advisors to find out which type of life insurance is more suitable. 6 Manulife Global Indexed UL

9 Policy value allocated to the Index Appreciation Account is sub-allocated to the three Indexed Accounts using the following percentages: INDEXED ACCOUNT ALLOCATIONS S&P % Hang Seng Index 25% MSCI EAFE 10% Each Indexed Account earns a rate of interest based on the one-year, point-to-point performance of its underlying financial index. We apply a 0% Floor Rate, a 100% Participation Rate and a declared Cap Rate (which may be different between Indexed Accounts). Segment Interest Credits realized in these three Indexed Accounts make up the overall return of the Index Appreciation Account. Index Appreciation Account Performance Historical Performance While past performance is not indicative of future results, the upside potential of Manulife Global Indexed UL is clear providing consistently strong results, year after year, with no risk of investment loss, regardless of market performance. The example below demonstrates the annual point-to-point historical performance of the three underlying indices (S&P 500, Hang Seng Index and MSCI EAFE ) compared to the Index Appreciation Account (65% S&P 500, 25% Hang Seng and 10% MSCI EAFE). The Index Appreciation Account Performance reflects current cap rates. 100% 80% 60% 40% 20% 0% -20% -40% -60% Source: S&P 500, Hang Seng and MSCI EAFE date from December 15, 1996 December 15, 2015 MGIUL s Index Appreciation Account S&P 500 Hang Seng Index MSCI EAFE Past performance is not indicative of future results. The example above demonstrates the annual point-to-point historical performance of the three underlying indices (S&P 500, Hang Seng Index and MSCI EAFE ) compared to what would have been credited under the Index Appreciation Account (65% S&P 500, 25% Hang Seng and 10% MSCI EAFE). The Index Appreciation Account Performance reflects current cap rates and the guaranteed floor and participation rate. Manulife Global Indexed UL 7

10 The example below uses a table format to demonstrate the annual, point-to-point historical performance for each of the underlying indices as well as the Index Appreciation Account. The Index Appreciation Account Performance reflects current cap rates. Segment Maturity Date S&P 500 Hang Seng Index MSCI EAFE MGIUL s Index Appreciation Account* 12/14/ % 28.96% 3.64% 7.45% 12/14/ % % 0.83% 5.02% 12/14/ % -7.44% 14.18% 5.68% 12/14/ % 65.72% 23.99% 7.83% 12/14/ % -4.83% % 0.00% 12/14/ % % % 0.00% 12/14/ % % % 0.00% 12/14/ % 29.46% 30.93% 7.83% 12/14/ % 11.51% 18.71% 7.83% 12/14/ % 6.64% 15.25% 6.15% 12/14/ % 26.33% 22.53% 7.83% 12/14/ % 45.69% 8.90% 4.83% 12/14/ % % % 0.00% 12/14/ % 49.65% 33.81% 7.83% 12/14/ % 6.09% 4.72% 6.93% 12/14/ % % % 0.00% 12/14/ % 23.16% 16.33% 7.83% 12/14/ % 2.83% 14.64% 6.39% 12/14/ % 0.01% -2.83% 4.94% 12/14/ % -8.34% -5.74% 0.64% 8 Manulife Global Indexed UL

11 Historical Look-Back Rate Easy for your clients to understand The Index Appreciation Account utilizes the 25-year lookback rate (currently 1/1/ /31/2015). The current maximum illustrated Segment Growth Rate is 5.30% (rate is as of 12/31/2015). Historical Look-Back Period Period (years) S&P % 5.34% 4.68% 5.31% 5.42% 5.42% Hang Seng 4.44% 5.27% 4.75% 5.03% 5.41% 5.42% MSCI EAFE 3.73% 4.00% 3.84% 4.22% 4.09% 4.30% Index Appreciation Account 5.53% 5.20% 4.62% 5.14% 5.30% 5.32% Manulife Global Indexed UL 9

12 What About Financing? Illustrations and Cash Surrender Value Letters are easy to use Both day-one and end-of-year guaranteed Cash Surrender Values appear prominently on all illustrations and in the Cash Surrender Value Letter. See the following sample MGIUL Cash Surrender Value Letter: 16 February 2016 Sample Distributor Manufacturers Life Insurance Company 1 Church Street, 4th Floor Hamilton HM 11, Bermuda Dear Sir/Madam: Sales Illustration: Manulife Global Indexed UL Flexible Premium Indexed Universal Life Insurance, Non-Participating Insured: Sample Policy #: Age/Sex/Risk/Rating: 45/Male/Standard Plus NonSmoker/None Residency Code: Face Amount: Initial Premium: A+ $20,000,000 $3,957,620 Death Benefit Option: Cash Value Enhancement: Premium Frequency: Level 1 No Annual Initial Premium Allocation: Index Appreciation Account 100% Fixed Account 0% As requested, the following is a calculation of the policy Cash Surrender Value immediately after receipt of the initial premium payment. Please refer to the enclosed sales illustration for more information. Summary of Cash Surrender Value Immediately Following Initial Premium Payment Initial Premium Payment $3,957,620 Less 6.0% Premium Charge 237,457 Equals 3,720,163 Less Cost of Insurance and Face Amount Charges 11,416 Less Surrender Charge 451,278 Equals Cash Surrender Value $3,257,469 Based on the assumptions that are described in the illustration, the following is a projection of the policy Cash Surrender Value at the end of year 1. Summary of Cash Surrender Values End of Year 1 Net Surrender Value based on guaranteed assumptions Net Surrender Value based on non-guaranteed assumptions $3,250,754 $3,371,590 If the premiums are paid and allocated in the manner illustrated above, then the Net Surrender Value based on guaranteed assumptions described in the illustration will be realized at the end of year 1. Net Surrender Value based on non-guaranteed assumptions described in the illustration is subject to change and may be higher or lower at the end of year 1. Amounts allocated to the Index Appreciation Account only form new Segments on the Segment Initiation Date (the 15th day of the month), subject to a Lock In Date of three Business Days prior to the Segment Initiation Date; which means that depending on The Manufacturers Life Insurance Company (Bermuda Branch) Maxwell Roberts Building, 4th Floor, 1 Church Street, Hamilton HM 11, Bermuda Tel: (441) Fax: (441) Manulife_Bermuda@manulife.com Manulife Financial and the block design are registered service marks and trademarks of The Manufacturers Life Insurance Company and are used by it and its affiliates including Manulife Financial Corporation. 10 Manulife Global Indexed UL

13 Accessing Policy Values Policy Values can be accessed via policy loans or withdrawals.* Policy Loans The policy owner has the option of borrowing a portion of the Policy Value in the form of a policy loan. Policy loans are generally secured by the balance in your Fixed Account which is subsequently transferred to a Loan Account. The rate of interest charged for a policy loan is variable, but also guaranteed to never exceed the rate of interest credited to the Loan Account by more than 1.25%. Partial Withdrawals Withdrawals are available after the first policy year. * Loans and withdrawals will reduce the death benefit, cash surrender value, and may cause the policy to lapse. Cash value available for loans and withdrawals may be more or less than originally invested. Manulife Global Indexed UL 11

14 Straight from the front lines You Have Questions, We Have Answers. Q. Is Manulife Global Indexed UL (MGIUL) a variable life product? A. No, MGIUL is a traditional universal life product, and does not directly participate in the equity markets. Regardless of market conditions, the policy is never subject to an investment loss. Q. Can I offer my client an MGIUL policy as a traditional universal life alternative? A. Yes, you may allocate 100% of a client s policy value to the Fixed Account, bypassing the Index Appreciation Account entirely. MGIUL s Fixed Account (currently crediting 3.80%) credits interest daily, identically to a traditional universal life product. The Fixed Account s current interest rate is guaranteed for the first policy year, and thereafter guarantees a rate of no less than 2.00%. Q. Is Indexed Universal Life (IUL) a new product line? If so, tell me about its history. A. IUL is not a new product line in the life insurance industry. IUL has been around for over a decade now, and is currently the fastest growing permanent insurance product category in the U.S. Indexed UL market share now represents 54% of UL premium and 21% of total individual life insurance new annualized premium. (Source: LIMRA YTD Q3 2015) Q. Can MGIUL be used in a financed case? A. Yes, most banks use a policy s guaranteed cash value and a low point as points of reference in determining maximum financing. Both day-one and end-of-year guaranteed cash value appear prominently on all illustrations and in the cash value letter on Manulife Illustrator. Q. What values can a bank use for financing? A. For collateral purposes, an institution financing an MGIUL policy can consider the guaranteed Policy Value at the end of the first policy year earning the Cumulative Guarantee rate of 2.00%, applied to the entire Policy Value (regardless of the premium allocation). Q. How is Day-One Cash Surrender Value calculated for the Index Appreciation Account? A. Since no interest is shown immediately following a premium payment (regardless of premium allocation to either account) the Day-One Cash Surrender Value is calculated identically to a policy allocated to the Fixed Account. Example: Initial Premium Payment $3,957,620 Less 6.0% Premium Charge $237,457 Equals $3,720,163 Less Cost of Insurance & Face Amount Charges $11,416 Less Surrender Charge $451,278 Equals Cash Surrender Value $3,257, Manulife Global Indexed UL

15 Q. Can MGIUL be paid in multiple annual premiums instead of a single premium at issue? A. Yes, multi-pay is available on MGIUL. MGIUL is a traditional universal life policy, and flexible premium payments are allowed. Premiums can be illustrated anywhere from a single premium in year 1, to a 5-pay, 10-pay or even lifetime premiums (to age 100). Q. Is the Quit Smoking Incentive (QSI) available on MGIUL? A. Yes, QSI is included on MGIUL. Clients rated as Smokers pay the same policy charges as non-smokers for the first three policy years, and can qualify to be permanently re-rated as Non Smokers if they quit smoking during this period. Q. How does the 2% Cumulative Guarantee work? A. The Cumulative Guarantee provides an alternate policy value in the event that the policy should perform poorly over a number of years. It ensures a minimum average annualized rate of return of 2% (less policy charges) over the life of the policy, upon surrender. Q. Why did Manulife select these indices? A. MGIUL s Index Appreciation Account performance is linked to three of the most recognized financial indices worldwide: the S&P 500, the Hang Seng Index and the MSCI EAFE. These three indices were chosen based on their past performance and the complimentary nature of the underlying markets and equities they represent. This blended approach provides greater diversification among many different developed markets worldwide, and can help smooth out volatility by tapping into the performance of several market sectors throughout the world. Q. Can a client transfer policy value from the Fixed Account to the Index Appreciation Account (IAA), or vice versa? A. Yes, transfers from the Fixed Account into the Index Appreciation Account are available at any time. New Indexed Account Segments are however only created on the 15th of the month. Until creating new Segments, these transferred balances earn the same rate of interest as funds in the Fixed Account. Transferring balances from the Index Appreciation Account to the Fixed Account are not permitted; however, the policy owner can elect to allocate maturing Segment proceeds to the Fixed Account. Those funds move to the Fixed Account at the Segment Maturity Date. Q. Can I illustrate a transfer or reallocation? If so, how? A. Yes, you can illustrate a one-time transfer of balances from the Rates/Targeting/Funding section of Manulife Illustrator. Select yes in the One Time Reallocation field, enter the desired allocation percentages in the To Index Appreciation Account and To Fixed Account, and enter the year or age you wish to show the transfer in the Transfer Age/Year field. Manulife Global Indexed UL 13

16 For Distributor/Financial Representative use only. Not for use with the public Standard & Poor s, S&P, S&P 500, Standard & Poor s 500 (collectively, referred to as S&P ) are trademarks of The McGraw-Hill Companies, Inc. MSCI and EAFE (collectively referred to as MSCI ) are trademarks of Morgan Stanley Capital International, Inc. Hang Seng Index is a trademark of Hang Seng Data Services Limited. Manulife has been licensed to use the trademarks of S&P, MSCI and Hang Seng Index (collectively, the Indices ), but the Manulife Global Indexed UL (the Product ) is not sponsored, endorsed, sold or promoted by the licensors of the Indices. Furthermore, the licensors of the Indices do not make any representations regarding the advisability of purchasing the Product. You cannot invest directly in any of the Indices. Please read the full disclosure in the Manulife Global Indexed UL policy regarding the S&P, MSCI and Hang Seng Indices in relation to the policy. Loans and withdrawals will reduce the death benefit, cash surrender value, and may cause the policy to lapse. Cash value available for loans and withdrawals may be more or less than originally invested. For policies that become subject to the United States tax authority, a withdrawal taken, or lapse or surrender of such policy with a loan may cause the recognition of taxable income. If classified as a modified endowment contract, these policies may be subject to tax when a loan is made. A loan or withdrawal taken prior to age 59½ may also result in a tax penalty. Guaranteed product features are dependent upon minimum premium requirements and the claims-paying ability of the issuer. Scan this code to find out more. Manulife Global Indexed UL is issued by The Manufacturers Life Insurance Company (Bermuda Branch). Manulife Financial and the block design are registered service marks and trademarks of The Manufacturers Life Insurance Company and are used by it and its affiliates including Manulife Financial Corporation. LIFE /16 MBD