PRESERVE ANNUITY ASSETS FOR OTHERS

Transcription

1 Optional Death Benefits Issued by Minnesota Life PRESERVE ANNUITY ASSETS FOR OTHERS Available with MultiOption Guide and Extra variable annuities

2 What s inside Protecting assets, providing guarantees 3 Variable annuities 4 Guaranteed Minimum Death Benefit 5 Optional death benefits overview 5 Highest Anniversary Value II 7 Premier II 7 Optional death benefit example 8 Benefits for a surviving spouse 9 Premier Protector 10 Estate Enhancement Benefit II 12 Additional information for optional death benefits 13 Are they right for you? 14 We are Securian Financial Group 15 2

3 Protecting assets PROVIDING GUARANTEES When you re preparing for your retirement journey, you re probably thinking beyond your own retirement income needs. Before you begin accessing any income, you want to make sure those assets will be preserved for the people you care about. MultiOption Guide and Extra variable annuities provide a minimum death benefit guarantee protecting and preserving your assets for loved ones. Looking for even greater guarantees? Optional death benefits, available for an additional cost, provide greater protection, flexibility and can further enhance the death benefit on your contract. Variable annuities and optional death benefits provide a powerful combination that helps preserve assets for the people you care about. 3

4 What is a variable annuity? Variable annuities are long-term investment products designed to help you save and grow assets for retirement. Then once you retire they can provide a sustainable source of income. What benefits do they provide? Variable annuities help you address the financial risks and roadblocks of a long retirement with: A wide range of investment choices to help you customize your annuity to meet your long-term goals and risk comfort level. Tax-deferred earnings that help you accumulate retirement assets faster because your investment gains aren t taxed each year. When the time is right and you begin taking income, your earnings will be taxable as ordinary income. A variety of ways to receive income in retirement, including the ability to generate a guaranteed stream of income for a set amount, a set period of time, or for a lifetime. The opportunity to add optional living benefits, which provide additional flexibility and income guarantees. A death benefit to protect your annuity assets for the people you care about once you re gone, and optional death benefits you can add to further preserve or enhance assets you pass on. Adding a MyPath optional living benefit? Securian s suite of MyPath optional living benefits which help you protect, grow, and sustain retirement income has its own optional death benefit that may be added to MyPath Core Flex and MyPath Value contracts: the MyPath Highest Anniversary Death Benefit. The optional death benefits in this brochure are only available with contracts that do not include a MyPath optional living benefit. 4

5 Guaranteed Minimum Death Benefit MultiOption Guide and Extra variable annuities provide a minimum death benefit guarantee. This death benefit preserves your purchase payments into the contract should you pass away before receiving annuity income. It is available for no additional cost. Beneficiaries receive the greater of: The value of the annuity contract at the contract owner s death, or Total purchase payments, adjusted pro-rata for withdrawals. Optional death benefits Leaving your loved ones an additional measure of financial security is a powerful and meaningful gift. Optional death benefits can help you create the legacy you want by offering a range of additional protection and guarantees. Lock in market gains for beneficiaries BENEFICIARY ASSET PROTECTION OPTIONS IF YOU WANT TO Ensure guaranteed growth every year, AND lock in market gains for beneficiaries Ensure guaranteed growth every year, lock in market gains for beneficiaries AND provide flexibility to accelerate the benefit for qualifying events ESTATE ENHANCEMENT Offset taxes and other expenses for beneficiaries CONSIDER ADDING Highest Anniversary Value II Death Benefit Premier II Death Benefit Premier Protector Death Benefit 1 Estate Enhancement Benefit II 1 Premier Protector is not available with MultiOption Extra. Guarantees are based on the financial strength and claims-paying ability of the issuing insurance company. Guarantees have no bearing on the performance of the variable investment options. 5

6 Optional death benefits Preserve annuity assets Offset expenses beneficiaries may face after you re gone Create a legacy for those you care about 6

7 Options to protect assets for your beneficiaries Available at contract issue through age Highest Anniversary Value II This optional death benefit captures upside investment performance by locking in market gains for beneficiaries. Beneficiaries receive the greater of: The Guaranteed Minimum Death Benefit (provided with every MultiOption annuity), or Highest Anniversary Value highest value achieved on any contract anniversary through age 80, increased by purchase payments and reduced pro-rata for amounts withdrawn since the Highest Anniversary Value was determined. Annual Cost: 0.30% of death benefit value, deducted quarterly from the variable account. 2 Premier II This optional death benefit has two distinct components that provide you with a powerful legacy tool to ensure guaranteed growth of the death benefit, while preserving those assets for your loved ones. The Highest Anniversary Value component allows you to lock in market gains, while a 5% Increase Value accumulates at 5% compounded annually. Beneficiaries receive the greater of: The Guaranteed Minimum Death Benefit (provided with every MultiOption annuity). Highest Anniversary Value highest value achieved on any contract anniversary through age 80, increased by purchase payments and reduced pro-rata for amounts withdrawn since the Highest Anniversary Value was determined. 5% Increase Value variable purchase payments (increased by transfers in and reduced by withdrawals or transfers out of the variable investments) compounded at 5% annually up to the contract anniversary on or following the 80th birthday, plus the value of the DCA (Dollar Cost Averaging) Fixed Account, if applicable. The maximum Increase Value is 200% of purchase payments, adjusted pro-rata for withdrawals. Annual Cost: 0.80% of death benefit value, deducted quarterly from the variable account. 7

8 How Securian s optional death benefit components work LOCK IN GAINS FOR LOVED ONES Initial Purchase Payment Purchase Payment Contract Value Highest Anniversary Value Increase Value Guaranteed Minimum Death Benefit Contract Anniversary This is a hypothetical example for illustrative purposes only and is not intended to predict or project investment results. Assumes a client under age 80 and no additional purchase payments or withdrawals. 8

9 Benefits for a surviving spouse On Securian s Highest Anniversary II and Premier II death benefit options, a spouse sole beneficiary or a spouse joint owner can continue to keep the annuity in place after the death of the first owner by taking ownership of the contract, and may continue the death benefit s guarantees based on their age. At the time of the ownership change, the value of the contract will be adjusted up to the death benefit value, if higher, and the death benefit guarantees will continue based on the age of the remaining spouse. Upon the second death, the applicable death benefit value is paid to the contract s beneficiaries. The benefits for a surviving spouse are the same whether the spouse is a joint owner of the contract, or a beneficiary. SPOUSAL CONTINUANCE EXAMPLE USING HIGHEST ANNIVERSARY VALUE II KATHY S OWNERSHIP MARK S OWNERSHIP The Highest Anniversary Value feature stops after Mark turns 80. This amount is locked in. Because Kathy is under age 80, the Highest Anniversary Value feature resumes locking in gains at each contract anniversary through age 80. Mark Kathy Contract Value Highest Anniversary Value II When Mark passes away and Kathy assumes the contract, the contract value is adjusted to the locked-in death benefit amount. When Kathy passes away, the death benefit in this case Highest Anniversary Value II is paid to her beneficiaries Age at each Contract Anniversary Hypothetical example for illustrative purposes only and is not intended to predict or project investment results. Assumes no additional purchase payments or withdrawals. Please consult your tax advisor if you have questions regarding the recognition of your spouse under federal law. 9

10 Add flexibility, while protecting and growing assets for beneficiaries Premier Protector is available at contract issue through age 70. Not available with EEBII or the MultiOption Extra variable annuity contract. 3 Premier Protector Two distinct components of this benefit help protect and grow your death benefit for beneficiaries, while providing flexibility and access to you, should the unexpected occur. The Highest Anniversary Value component allows you to lock in market gains, while a 4% Increase Value accumulates at 4% compounded annually. If life takes an unexpected turn, and you experience a permanent qualifying event, Premier Protector allows you to accelerate your access to the death benefit, providing complete flexibility on how you choose to spend those proceeds. Beneficiaries receive the greater of: The Guaranteed Minimum Death Benefit or the Premier Protector Death Benefit which is the greater of: Highest Anniversary Value highest value achieved on any contract anniversary (increased by purchase payments since last value determined) through age 85. 4% Increase Value purchase payments compounded at 4% annually up to the contract anniversary on or following the 85th birthday. Withdrawals reduce both the Highest Anniversary Value and the 4% Increase Value on a pro-rata basis. Annual Cost: 0.90% of Premier Protector Death Benefit Value. Accelerated Death Benefit After the 1st contract anniversary, the Premier Protector Death Benefit Value may be available for your use, based on certification by a Licensed Health Care Practitioner of a permanent qualifying event (after a 90-day elimination period). Once your benefit is accelerated the contract value is increased to the Premier Protector Death Benefit Value and transferred to the Fixed Account where it becomes available for your use. You decide how to best spend your benefit. There are no deferred sales charges upon withdrawal or surrender. However, once your benefit is accelerated for your access, it can t be cancelled. The death benefit amount will be equal to your contract value. No other purchase payments can be made, and there are no options to allow your spouse to continue the benefit after your death. The Premier Protector Death Benefit is not long-term care or nursing home insurance. Individuals may not elect this benefit if they are currently in a nursing home, skilled nursing facility or unable to perform any one of the six ADLs. Please review the prospectus for additional information on the ADLs. 10

11 What is a qualifying event? A qualifying event is a permanent condition, and must be certified by a licensed health care practitioner. It s defined by one of the following (after a 90-day elimination period): A chronic Illness, where one is unable to perform 2 of 6 activities of daily living, or severe cognitive impairment. Activities of daily living (ADLs) refer to basic functional abilities that ensure the ability for self-care and ability to live independently without substantial assistance from another individual. The six ADLs are: bathing, continence, dressing, eating, toileting and transferring. Terminal illness (a life expectancy of 12 months or less). 11

12 Ensure your legacy with further enhancements Available at contract issue through age 75. Not available if you add Premier Protector. 4 Estate Enhancement Benefit II (EEB II) This benefit is designed to increase the value of your contract to offset taxes or other expenses beneficiaries may face, and can help ensure your legacy. At death, it increases the value of the contract by 40% of the contract s earnings prior to any death benefit adjustment (25% if your age at issue is between 70 and 75). Earnings is defined as the contract value minus any purchase payments into the contract not previously withdrawn. The maximum benefit is earnings capped at 200% of purchase payments (adjusted pro-rata for withdrawals). Annual Cost: 0.25%, deducted from both guaranteed interest options and variable accounts. HOW THE ESTATE ENHANCEMENT BENEFIT II WORKS $300,000 Value of death benefit to beneficiaries: $275, ,000 Contract Value at death: $225,000 $50,000 Estate Enhancement Benefit II 200, ,000 $125,000 Earnings X 40% $125,000 Earnings 100,000 50,000 $100,000 Purchase Payment $100,000 Purchase Payment 0 This is a hypothetical example for illustrative purposes only and is not intended to predict or project investment results. It assumes the Estate Enhancement Benefit II is purchased prior to age

13 Estate Enhancement Benefit II options for surviving spouses A surviving spouse can choose to: Assume the contract and keep EEB II in place. Assume the contract and add the amount of the EEB II benefit to the contract value. After this, the benefit would terminate with no further EEB II payable at the spouse s death. For purposes of calculating EEB II, withdrawals from the contract are considered to be made first from earnings. For contracts part of a 1035 exchange, note that the cost basis can be different than total purchase payments, so what is considered earnings under the benefit may differ from taxable gains. If elected, EEB II will reduce the interest rate for guaranteed interest options by 0.25%, but the rate will never be less than the guaranteed minimum interest rate. Additional information about optional death benefits Optional death benefits primarily help protect annuity assets before you begin taking annuity income. They terminate at annuitization. If you are planning on using annuity assets for income in the very near future, you may not receive the maximum value from optional death benefits. Optional death benefits must be selected at time of purchase and can t be cancelled. The optional death benefits in this brochure are not available for use with MyPath optional living benefits. For optional death benefits added to a jointly owned contract, the benefits are based on the age of the older owner. If your MultiOption annuity includes Credit Enhancements, the Credit Enhancement is treated as earnings for the purposes of calculating the death benefits. Death Benefits will be reduced by any Credit Enhancement applied within 12 months. Taxable Earnings When the death benefit amount exceeds the investment in the annuity (the cost basis), for tax purposes the additional amount is treated as earnings. Beneficiaries will be subject to tax when they receive those earnings. If the annuity is part of a qualified plan, beneficiaries will be taxed on the full value of the contract. Withdrawals or surrender of contract value during the acceleration period of Premier Protector will be subject to taxation in the same manner as any other withdrawal. You may wish to consult your tax advisor before electing to accelerate your benefit. Distributions Your beneficiaries will have a number of choices as to how annuity assets are distributed. They can withdraw all assets in one lump sum within five years, turn assets into lifetime income or keep the annuity and take annual withdrawals based on their life expectancy. In addition, spouse beneficiaries can take ownership of the annuity and treat it as their own. We ll work with your beneficiaries to help them find an approach that fits their goals and plans. This information is a general discussion of the relevant federal tax laws. It is not intended for, nor can it be used by any taxpayer for the purpose of avoiding federal tax penalties. This information is provided to support the promotion or marketing of ideas that may benefit a taxpayer. Taxpayers should seek the advice of their own tax and legal advisors regarding any tax and legal issues applicable to their specific situation. 13

14 Are optional death benefits RIGHT FOR YOU? Talk to your advisor today to learn if adding optional death benefits to your MultiOption variable annuity would make sense for your situation. Optional death benefits may help you: Preserve annuity assets, and provide an important source of income for loved ones. Create a legacy for your spouse, children or grandchildren. Access your benefit early, should a permanent qualifying event occur in your life, providing flexibility and control of how you spend those amounts. Offset taxes and other expenses your beneficiaries may face upon your death. 14

15 WE ARE SECURIAN You may not have heard of us. Boasting is not our strong suit. But we are one of the nation s largest and strongest financial services providers. Securian provides retirement solutions, investments and insurance through our subsidiaries, including Minnesota Life. Minnesota Life issues our annuities and has been a respected presence in the industry for more than a century. For more information about the rating agencies, and to see where our ratings rank relative to others, visit securian.com/ratings. WE ARE a highly rated company headquartered in St. Paul, Minnesota. WE DO what s right. Our strong record of transparency, compliance and ethical conduct sets us apart. WE ARE a trusted longterm partner with a laser-sharp focus on helping people reach their goals now and in the years ahead. 15

16 This is a general communication for informational and educational purposes. The materials and the information are not designed, or intended, to be applicable to any person s individual circumstances. It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. If you are seeking investment advice or recommendations, please contact your financial professional. An annuity is intended to be a long-term, tax-deferred retirement vehicle. Earnings are taxable as ordinary income when distributed, and if withdrawn before age 59½, may be subject to a 10% federal tax penalty. If the annuity will fund an IRA or other tax qualified plan, the tax deferral feature offers no additional value. Qualified distributions from a Roth IRA are generally excluded from gross income, but taxes and penalties may apply to non-qualified distributions. Please consult a tax advisor for specific information. There are charges and expenses associated with annuities, such as deferred sales charges for early withdrawals. Variable annuities have additional expenses such as mortality and expense risk, administrative charges, investment management fees and rider fees. Variable annuities are subject to market fluctuation, investment risk and loss of principal. This must be preceded or accompanied by a current MultiOption variable annuity prospectus. You should consider the investment objectives, risks, charges and expenses of a portfolio and the variable insurance product carefully before investing. The portfolio and variable insurance product prospectuses contain this and other information. Please read the prospectuses carefully before investing. We reserve the right to limit or discontinue acceptance of future purchase payments after the contract is issued. This may limit the ability to increase the contract value through additional purchase payments. If an optional benefit is elected in the contract, this may also limit the ability to increase the value used to calculate the optional benefit. For costs and further details, contact your financial advisor. IRS regulations state that Individual Retirement Accounts (IRAs) may not invest in life insurance contracts. However, a contract that is used as an IRA may provide for a death benefit that equals the greater of the purchase payments made and the contract value. In addition, Section 401 plans, section 403(b), 457(b) annuities and IRAs (but not Roth IRAs) can only offer incidental death benefits. The IRS could take the position that the enhanced death benefits provided by the optional death benefit riders are not incidental. MultiOption annuities and the optional death benefits may not be approved in all states and product features may vary by state. Guarantees are backed by the financial strength and claims-paying ability of the issuing company. This brochure must be used in conjunction with a MultiOption variable annuity fact sheet. Since 1880, Securian Financial Group and its affiliates have provided financial security for individuals and businesses in the form of insurance, investments and retirement plans. Now one of the nation s largest financial services providers, it is the holding company parent of a group of companies that offer a broad range of financial services. Not a deposit Not FDIC/NCUA insured Not insured by any federal government agency Not guaranteed by any bank or credit union May go down in value Securian Financial Group, Inc. Insurance products are issued by Minnesota Life Insurance Company in all states except New York. In New York, products are issued by Securian Life Insurance Company, a New York authorized insurer. Minnesota Life is not an authorized New York insurer and does not do insurance business in New York. Both companies are headquartered in St. Paul, MN. Product availability and features may vary by state. Each insurer is solely responsible for the financial obligations under the policies or contracts it issues. Variable products offered through Securian Financial Services, Inc. Member FINRA/SIPC. 400 Robert Street North, St. Paul, MN Securian Financial Group, Inc. All rights reserved ICC ICC ICC ICC ICC F79281 Rev DOFU (55972)