Index. Lincoln s Term Conversion Product Options for New Business LIFE INSURANCE. September 12, 2016 Vol. 14, Issue 17

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1 September 12, 2016 Vol. 14, Issue 17 LIFE INSURANCE Lincoln s Term Conversion Product Options for New Business The recently announced Term Conversion changes support our ability to continue to offer a comprehensive, competitive and relevant portfolio of term products for your clients. Our Term Conversion guideline practices are still among the most competitive in the industry, providing you and your clients the flexibility needed to customize their long-term plans. Effective September 12, 2016, Lincoln supports you and your clients through compensation paid for term conversions, and the addition of contractually guaranteed conversion product options available on new term policies. Advisors Will Be Paid Commissions on Conversions All new term policies with policy effective dates on or after September 12, 2016 will receive full first year and renewal commission on term conversions in policy years 4 and following. Reduced first year commission will be paid on term conversions in policy years Index Lincoln s Term Conversion Product Options for New Business Lincoln LifeGuarantee UL (2013) Rates as of 09/12/16 Coming Soon Grace/Lapse Notice Enhancements Coming Soon Term Premium Notice Redesign Term policy year at Commission Paid on Permanent Policy conversion 1 First year commission reduced by 100% of the commission paid on the term policy. Full renewal commission. 2 First year commission reduced by 50% of the commission paid on the term policy. Full renewal commission. 3 First year commission reduced by 25% of the commission paid on the term policy. Full renewal commission. 4+ Full first year and renewal commission. NEW Amendment on New Sales of Existing Products A Conversion Products Amendment that contractually guarantees the right to convert to the full product portfolio 2 for the first seven policy years of the conversion period will automatically be included at no additional cost with all Lincoln LifeElements and Lincoln TermAccel Level Term policies. This will assure you and your clients that product access will not be changed during this timeframe. Conversion is guaranteed to a limited product portfolio 3 in policy years eight through the end of the conversion period. For Agent/Broker use only. Not for use with the public. Page 1 of 7

2 NEW Product For Clients Wanting a Stronger Conversion Feature For clients who desire a stronger conversion feature, Lincoln introduces an additional offering within the term portfolio, Lincoln LifeElements Level Term with the Conversion Products Enhancement. Available for a higher cost than the standard product, this new product contractually guarantees the right to convert to the full product portfolio 2 for the entire conversion period Approximately 20-50% higher cost than standard product depending on issue age, risk class and term period. Maximum issue ages are limited to ensure the enhanced conversion period does not end prior to the level term period. Therefore, there will be no years that the extra premium is paid for an enhanced conversion right after the conversion period ends. Term Period Max Issue Age Years of Enhanced Conversion 10 year 60 3 (10-7) 15 year 55 8 (15-7) 20 year (20-7) 30 year (30-7) Will use the same schedule of commissions as the corresponding standard Lincoln LifeElements Level Term product. Transition Rules Subject to state availability, the Conversion Products Amendment on Lincoln LifeElements Level Term and Lincoln TermAccel Level Term will automatically be included with policy effective dates on or after September 12, Rewrites will not be allowed in order to receive the Conversion Products Amendment. Subject to state availability, new business applications will be accepted on September 12, 2016 on the new product, Lincoln LifeElements Level Term with the Conversion Products Enhancement. Note: The application / illustration must clearly request the Conversion Products Enhancement product. Will not be made available in New York or for use with Lincoln TermAccel Level Term. Click here to view the Term state availability grid. Illustrations Subject to state availability, illustrations reflecting the following will be available with the Lincoln DesignIt SM illustration software v.34.0 C. If you have an active internet connection, the software will automatically update on September 12, Conversion Products Amendment: If Lincoln LifeElements Level Term or Lincoln TermAccel Level Term is selected, the Conversion paragraph in the Product Description output will be updated to reflect access to the full product portfolio 2 during the first seven policy years of the conversion period and to a limited product portfolio 3 in policy years eight through the end of the conversion period. For Agent/Broker use only. Not for use with the public. Page 2 of 7

3 Lincoln LifeElements Level Term with the Conversion Products Enhancement: This new product will be available as an option under the existing Lincoln LifeElements Level Term (2014) -03/14/16 product. Winflex will also include this option. o A new checkbox Include Conversion Products Enhancement for additional cost will appear on the Basic tab under Other Options. o If selected, the higher premiums will be applied and the New Business Data page will indicate the selection of the Conversion Products Enhancement. The Conversion paragraph in the Product Description output will also be updated to reflect access to the full product portfolio 1 during the entire conversion period. Reference Materials Materials can also be viewed on the various Lincoln producer websites. Specimen Contracts Go to Term Life/Lincoln LifeElements Level Term/ Product Details/ Specimen Contracts Term Conversion Guidelines Go to My Business (tab)/ New Sales/ Policies and Procedures Life/ Term Conversion Click here to view the: Conversion Products Amendment for use on Lincoln LifeElements Level Term and Lincoln TermAccel Level Term. Lincoln LifeElements Level Term with the Conversion Products Enhancement Click here to view the 10 year contract Click here to view the 15 year contract Click here to view the 20 year contract Click here to view the 30 year contract Lincoln Life Product Term Conversion Guidelines (Revised 07/06/2016) Click here Marketing Materials The following marketing materials are now available for order or download from the Lincoln Fulfillment Center. Lincoln TermAccel SM Level Term advantages flier TO-ADV-FLI024 1 Please refer to Lincoln s Term Conversion Guidelines for details on current term conversion commissions. 2 Full Product Portfolio: Includes any single universal life and variable universal life policies available for new sales at the time of conversion except policies: Without surrender charges or with riders and/or benefits that waive surrender charges or enhance surrender values (i.e. Lincoln AssetEdge Exec VUL, Lincoln LifeReserve UL and Lincoln LifeReserve Indexed UL Accumulator with the Exec Rider, Lincoln VUL ONE, Lincoln AssetEdge VUL with the Enhanced Surrender Value Rider, Lincoln WealthAdvantage IUL with the Surrender Value Enhancement Endorsement). Sold within the Guaranteed Issue or Simplified Issue underwriting classification That include riders and/or benefits that provide optional long-term care coverage (i.e. Lincoln MoneyGuard product suite) 3 Limited Product Portfolio: Includes at least one single life individual permanent life insurance policy made available for the purpose of conversion at the time of conversion. For Agent/Broker use only. Not for use with the public. Page 3 of 7

4 Lincoln LifeGuarantee UL (2013) Rates as of 09/12/16 The life insurance industry is operating in a challenging environment, notably with pressure from historically low interest rates, making it increasingly important for us to take the fair and responsible steps necessary to ensure we both provide value to our policyholders and partners, and operate responsibly for the long-term. This includes taking prudent measures in managing interest rate-sensitive products, while enhancing and expanding our broad portfolio of products that are less interest rate sensitive. In response to the persistent low interest rates, including the recent historic lows, there will be pricing increases on the Lincoln LifeGuarantee UL product effective 9/12/16. While actions that impact customers are never a first course of action, this decision is consistent with our philosophy of providing valuable solutions appropriately priced for market conditions. Lincoln remains committed to the Life Insurance business, and will continue to provide a comprehensive Life product portfolio with solutions that will help Lincoln and its advisors grow their businesses responsibly, and provide your clients with innovative options that help secure their financial futures. Product Actions Premium increases of approximately 8-12% across all ages, underwriting classes, and funding patterns. Transition Guidelines All states will be approved at rollout except Maryland, Oregon and Puerto Rico. This product is not available in New York. For approved states, there will be a transition period that begins September 12, 2016 and ends October 14, Any states not available at rollout will have a 30-day transition period from the date they become available. Formal applications signed, dated and received in good order in Lincoln s home office on or before October 14, 2016 will receive the Lincoln LifeGuarantee UL (2013) - 02/08/16 pricing Pending and issued business will also receive the Lincoln LifeGuarantee UL (2013) - 02/08/16 pricing. For placed business, normal internal replacement guidelines apply. Rewrites will not be allowed. Click here to view the Universal Life state availability grid. Questions and Answers 1. Question: What about cases already in underwriting? Answer: If a case has been submitted as an informal application or on a trial basis and Lincoln has not yet received the formal application in-house, fully completed applications must be signed, dated and received in good order (including the 1035 Policy Exchange Agreement/Absolute Assignment form if the case is a 1035 Exchange) in Lincoln s Home Office by the end of the transition period to qualify. 2. Question: Are there any circumstances under which the old rates will be available even if all paperwork is not received? Answer: Yes. There is one exception to the rule. Applications that have been signed by the insured with the owner TBD, received in the Home Office by the end of the transition period but Lincoln is still awaiting a trust to be set up as part of the normal course of business. The applicant will still qualify. The only paperwork that Lincoln will not require at submission is the executed trust documents with the trustee/owner signature which must be received prior to issue. For Agent/Broker use only. Not for use with the public. Page 4 of 7

5 3. Question: Once an application is received in good order in Lincoln s Home Office by the end of the transition period, can any changes be made to the application? Answer: That depends upon the change being requested. Once an application has been received in good order in the Home Office, Lincoln will: Not allow an increase to the face amount on the application on the same insured. However, in 1035 Exchange situations where Lincoln received more premium than anticipated from the losing carrier resulting in an increase in death benefit, if the death benefit is within reasonable limits, Lincoln would allow. Not allow additional face amounts on a second policy using the same application. 4. Question: What is required to meet the transition period requirements for LincXpress SM Tele-App Cases? Answer: In lieu of a formal signed application, a complete ticket and required solicitation forms must be received in good order in Lincoln s home office within the same transition periods outlined above. Required solicitation forms include: LincXpress SM Tele-App Ticket (LF11252) Authorization for Release of Information (HIPAA) (LF02896 or state variations) Important Notice: Replacement of Life Insurance or Annuities (LF10087 or state variations) Must be signed on or before the earliest signed form in the ticket packet and is needed whether replacing or not replacing. Receipt of Privacy Practices Notice and Important Notice Acknowledgment Form (LF10244) Agent s Report (LF10971) Completed and signed by agent only 5. Question: How will term conversions into Lincoln LifeGuarantee UL (2013) meet the transition requirements? Answer: Term conversion applications must be signed, dated and received in good order in Lincoln s home office by October 14, 2016 in order to meet the transition requirements. Illustrations Illustrations for Lincoln LifeGuarantee UL (2013) rates as of 09/12/16 will be run on the current version of the Lincoln DesignIt SM platform (v34.0c). If you have an active internet connection, the software will automatically update to include the new rates on September 12, If you need to download the Lincoln DesignIt SM platform, it is available on the Lincoln producer websites or from Field Office Technicians. Marketing Materials The following marketing materials are now available for order or download from the Lincoln Fulfillment Center. Lincoln LifeGuarantee UL Case Study LG-CASE-FLI001 For Agent/Broker use only. Not for use with the public. Page 5 of 7

6 Coming Soon Grace/Lapse Notice Enhancements Effective October 8, 2016, several enhancements will be made to the customer Grace and Lapse notices for select Universal and Variable Life policies. Grace notices will identify the Required Amount of premium due to remove a policy from grace per policy specifications and, for some products, will also now state an Encouraged Amount where applicable. The Encouraged Amount will include an additional two months premium to ensure the policy does not fall back into the grace period. Customers who are on direct bill will no longer receive premium due notices after their policy has entered the grace period. This will eliminate any confusion regarding the amount of premium due. Direct bill statements will resume once the policy is no longer in a grace status. Lapse notices will no longer request a premium due, but will offer a reinstatement option and include the required forms needed to reinstate the policy. The amount of premium due is driven by the actual date the policy is reinstated and depends on when the customer applies for reinstatement. Therefore, the premium due will be determined when reinstatement is approved. At that time, the Customer Service team will notify the customer of the amount due. For additional question please contact the Customer Care Center at Coming Soon Term Premium Notice Redesign Effective November 18, 2016, all active Term Life products will have a newly redesigned premium notice. The new notice will now contain pertinent servicing information including: Next Premium Due Current Payment Frequency Options and Payment EFT Options This additional information will give key policy details and service options directly to the customer so that they can make informed decisions about their policy. The redesign captures this information in an easy to follow customer friendly new look. For additional question please contact the Customer Care Center at For Agent/Broker use only. Not for use with the public. Page 6 of 7

7 State Approvals Available as of September 12, 2016 Rollout: Initial release of Lincoln LifeGuarantee UL (2013) - 09/12/16 Initial release of Lincoln LifeElements Level Term with Conversion Products Enhancement. Initial release of Conversion Products Amendment AMD-7029 automatically issued for policy effective dates on or after 9/12/16 with Lincoln LifeElements Level Term (2014) - 03/14/16 and Lincoln TermAccel Level Term - 03/14/16. Lincoln SVUL ONE including the Optimal No Lapse Enhancement Rider (ONER) Massachusetts Optimal No Lapse Enhancement Rider (ONER) LR668 in lieu of LR626 for use with Lincoln VUL ONE (2014) Guam Massachusetts Puerto Rico Products and features subject to state availability. Guarantees are subject to the financial strength of the insurer. Lincoln Financial Group is the marketing name for The Lincoln National Corporation and its affiliates. Insurance policies are issued by The Lincoln National Life Insurance Company, Fort Wayne, IN. The Lincoln National Life Insurance Company (Lincoln) does not solicit business in the state of New York, nor is it authorized to do so. Contractual obligations are subject to the claimspaying ability of The Lincoln National Life Insurance Company. Insurance policies sold in New York are issued by Lincoln Life & Annuity Company of New York, Syracuse, NY. The contractual obligations are subject to the claims-paying ability of Lincoln Life & Annuity Company of New York (Lincoln). All guarantees and benefits of the insurance policy are subject to the claims-paying ability of the issuing insurance company. They are not backed by the broker-dealer and/or insurance agency selling the policy, or any affiliates of those entities other than the issuing company affiliates, and none makes any representations or guarantees regarding the claims-paying ability of the issuer. Variable products are sold by prospectus. For more information about the variable products, including fees and charges, refer to the prospectus. Variable products are distributed by Lincoln Financial Distributors and offered through broker dealers with effective selling agreements. Only registered representatives can sell variable products. View State Availability Grids 2016 Lincoln National Corporation LincolnFinancial.com Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. Affiliates are separately responsible for their own financial and contractual obligations. View index of past Lincoln Life Leader articles LCN: For Agent/Broker use only. Not for use with the public. Page 7 of 7