STEP 1 Accessing the Policy Information. STEP 2 Illustrating a Face Amount Decrease. June 2003

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1 1 June 2003 How to correctly illustrate face amount decreases with Inforce Illustrations 1.2 Following is a step-by-step guide to producing accurate illustrations when there is a face amount/payout decrease. STEP 1 Accessing the Policy Information To prepare a life insurance inforce illustration quotation, you ll need to open both Transamerica s LifeView illustration software and the webcappow system, and then proceed as follows: On webcappow, display the policy that you would like to illustrate. You can easily reference the policy by policy number or by name of insured. Next, click the Inforce tab on the far right side of your webcappow screen and click Download. The system will download the policy information to your computer. On LifeView, click Inforce Illustrations (located on the main menu screen) and select Import from webcappow. You ll be guided to download the policy information just captured from webcappow. The system will populate the LifeView screens with actual policy information based on the last month anniversary day. STEP 2 Illustrating a Face Amount Decrease On LifeView, go to the Coverages tab DO NOT enter the decreased face amount DO click the Custom in the Death Benefit field, as the correct box to enter the reduced surrender charges will not be reflected in face amount details the policy s cash value. 1

2 2 After you click the Custom box on the Coverages tab, the Face Amount Decreases window will appear. Use this window to enter the details of a future face amount decrease and proceed as follows: Enter the year in which the original face amount ends in the To Yr field on the top line. The year in which the reduced face amount begins will be automatically updated in the From Yr field on the next line. Enter the year in which the reduced face amount ends in the To Yr field on this line. Enter the new face amount where shown. Important: You must apply for face amount reductions using the correct forms and procedures. Your distributor can provide you with this information. As well, Transamerica will soon post this information on the Administration section of the Distribution Resource Centre (DRC). In the current inforce software, the face amount deduction is illustrated as of the policy anniversary date. Please contact your distributor if you require an illustration showing a face amount deduction within policy year. 2

3 3 STEP 3 Saving your changes After you enter details in the Face Amount Decreases window and click OK, the information is automatically saved. To delete the face amount reduction, uncheck the Custom box. To edit the face amount reduction, click Edit. 3

4 Step 4 Presenting the Illustration 4 In this example, the face amount was reduced from $300,000 to $200,000 in year 7. Please note the face amount adjustment as well as the reduction in the fund value. The reduction in the fund value reflects the partial surrender charges that are taken, in accordance with our contracts, when a face amount is reduced. With Face Amount reduction: Without Face Amount reduction : 4

5 Why are surrender charges required for face amount reductions? There are many up-front costs such as the expense of financial and medical underwriting, policy set-up, and compensation that a company has to cover when issuing a UL policy. These costs are normally recovered over time through the Cost of Insurance, which is tied to the face amount. However, if the face amount is reduced in the early policy years, the company cannot recoup its expenses. Surrender charges protect the company by ensuring that these costs will be recovered if the face amount is decreased or the policy is cancelled. The duration and method for determining surrender charges is stated in the policy contract and is guaranteed not to change. 5 Which plans can I use to illustrate Inforce Illustrations 1.2? Please note that Inforce Illustrations 1.2 can be used to illustrate only the following plans: ADVANTAGELife Plus ADVANTAGELife Assured Life TPlan Transaver Lifetimesaver Please contact your distributor for any other inquiries about inforce illustrations and for the following inforce illustrations not currently supported by Inforce Illustrations 1.2: Switching from ART (YRT) cost of insurance to level cost of insurance on the above plans Optimizer on ADVANTAGELife PLUS EstateADVANTAGE WealthADVANTAGE CHALLENGER and other former NN plans 5