John Hancock Life Insurance Company (U.S.A.)

Transcription

1 A Life Insurance Illustration of Protection UL A Flexible Universal Life Insurance Prepared For Presented By Scott D. Sorrell, CLU, ChFC, AIF, RICP, Capitol Financial Solutions 8816 Six Forks Rd. Suite 301 Raleigh, NC Phone: Fax: ssorrell@capfs.com Presented On Wednesday, November 05, 2014 This is an illustration only. An illustration is not intended to predict or project actual performance. Rates of Return, or values that are set forth in the illustration are not guaranteed, except for those items clearly labeled as guaranteed. Copyright 2014 John Hancock Life Insurance Company (U.S.A.). All Rights Reserved.

2 A Flexible Universal Life Insurance Valuable Information About Your Life Insurance Illustration Universal Life Insurance The Universal Life Insurance policy which you are considering provides flexible death benefit protection and premium payment flexibility. The values in the insurance contract grow based on the amount and timing of each premium payment, plus interest and other credits applied to the policy, less insurance and other charges. CASL, CLTC Option 1; Cash Accumulation Test received. benefit option changes, loans, withdrawals, rider termination or change, and/or face amount decreases will also affect the Protection feature. If a policy loan is outstanding, the Protection feature will not prevent your policy from lapsing if the falls to zero. Certain aspects of the policy cannot be predicted with absolute certainty. These nonguaranteed elements are described on the following pages. For example, the interest rate credited may exceed the guaranteed rate and monthly charges may be less than the maximum guaranteed charges. This is an illustration only and is not intended to predict actual performance. The life insurance provided in this illustration reflects a Total Initial of $250,000. The is composed of $250,000 in Face Amount (Option 1). The reflects any Debt (total loans plus any loan interest due). Protection This policy illustration shows the Protection feature guaranteeing the policy death benefit to the Life Insured s attained age 62. As long as the Protection feature is in effect, your policy cannot lapse even if the Cash falls to zero or below. The Protection feature will stay in effect as long as the reference value called the Protection is greater than zero. The Protection is a reference value and is only used to determine whether or not the Protection feature will stay in effect. The policyowner cannot access the reference value. Like your, the Protection is directly affected by the timing and amounts of premiums paid. To ensure that you have the Protection feature in effect for the period illustrated, it is important that premium payments are paid when they are due, otherwise your policy may lapse. For purposes of calculating your Protection, we will apply premiums retroactively to the beginning of the policy month in which they are Planned Outlay One of the advantages of Universal Life Insurance is premium payment flexibility, allowing you to vary the amount of your payments. This illustration assumes an Initial Planned Outlay of $1, and that all subsequent premium payments are made at the beginning of each modal period. Reduced or discontinued premiums in future years are only possible if the premiums paid and amounts credited are sufficient to cover the cost of insurance and administrative expenses. These factors, as well as any outstanding policy loans or withdrawals, could necessitate additional premiums to maintain your insurance coverage. Paying less than the planned premium can have a negative impact on the policy and its guarantees. Payments in excess of the planned premium are subject to underwriting approval. Guaranteed Coverage Based on the initial death benefit shown in the illustration, the level annual premium to guarantee coverage for life is $3, option changes, loans, withdrawals, policy changes, and face amount changes will cause this premium to be recalculated. s are subject to maximum guidelines allowed by the Internal Revenue Code. Minimum Initial Page 1 of 25

3 A Flexible Universal Life Insurance Valuable Information About Your Life Insurance Illustration (cont'd) The Minimum Initial shown on the Basic Illustration Summary page is the minimum premium to carry the policy for one policy month in the first policy year. If the policy is backdated the Minimum Initial multiplied by the number of months backdated plus one month is required to put the policy inforce. Interest Rate Interest is illustrated at an initial assumed effective annual rate of 5.05%. We determine the rate of interest to be credited to the based on our assessment of investment yields and other considerations as outlined in your policy. The current rate may increase or decrease, but at no point will the interest credited to the policy be lower than the guaranteed annual rate of 2.00%. Option 1; Cash Accumulation Test changes could affect the continuation of your coverage, keeping other assumptions constant (including planned premiums, issue age, risk class and current charges): Interest Rate Assumption 5.05% Initial Current Rate N/A 4.55% % % % % % % Minimum Rate 38 CASL, CLTC at Lapse* Our obligations under your policy are backed by our general account assets. In addition to fixed income investments, such as corporate bonds, we expect to invest a portion of the premiums received under this class of policies in equities and other longer-duration assets. This investment approach, which may be different from the mix expected with other universal life policies, is intended to produce results that would permit us to credit values that maximize your policy s performance over the longer term. However, this approach could also cause the policy to experience a higher degree of variability of results year-to-year relative to other universal life policies. It is important to review your annual statement and request periodic in-force illustrations to make sure your policy continues to meet your objectives. Illustrations will be shown at the guaranteed minimum interest rate, and an assumed rate (or rates). An assumed illustrated rate will never be higher than the current rate, or lower than the guaranteed minimum rate. s illustrated at the current or an assumed rate are not guarantees or estimates, but merely illustrate results on the basis of the selected assumption. Changes in the rate of interest that we declare will affect both the interest and Persistency Credit applied to your. The table below shows how these * In this table, the lapse year is hypothetical only, based upon the assumed factors, and is not guaranteed. For instance, the mortality charges used in these calculations are less than the maximum charges, and the Persistency Credit assumed is greater than the guaranteed minimum. Accessing After your policy has been in force for one year, you can make partial cash withdrawals. You can surrender your policy for cash at any time. We will pay you the policy value less a Charge and any policy debt you may have. You can also borrow the available cash value at any time. Amount Credited This is the interest earned on the including the amount of interest credited on the Loan Account, plus the Persistency Credit. Loans loans may be taken against the at any time, and if projected on an illustration, are assumed to be taken at the beginning of the year. The maximum loan amount available is the less any indebtedness, one year of policy charges, and one year's loan spread. The net cost of a loan equals the loan interest rate charged less the loan interest rate credited to the Page 2 of 25

4 A Flexible Universal Life Insurance Valuable Information About Your Life Insurance Illustration (cont'd) portion of securing the loan. This differential is guaranteed to be no greater than 1.25% in policy years In subsequent years, the differential is currently 0.00%, and guaranteed not to exceed 0.25%. CASL, CLTC Option 1; Cash Accumulation Test (MECs). Distributions from these policies (excluding death benefits but including policy loans and withdrawals) are taxed differently and may be subject to an IRS 10% penalty tax. TAMRA testing has been performed on the current scale only. Loan interest is payable in arrears. The loan interest rate used in this policy illustration is shown in the Summary. Loan interest rates are variable and subject to change annually on the policy anniversary. Annual Loan Interest This is the interest charged on the outstanding Debt. In the event that you do not pay the loan interest charged in any, it will be borrowed against the policy and added to the Debt in arrears at the Anniversary. Withdrawals Withdrawals reduce the and the. Withdrawals, if illustrated, are assumed taken at the beginning of the year. Continuation at Age 121 Provided your coverage is in effect on the policy anniversary nearest the date on which the life insured reaches attained age 121, coverage will continue after age 121 and interest will be credited. No additional charges, other than those for any outstanding policy loans, will be deducted. The tax implications with respect to policies that continue beyond age 121 are not clear at the present time. We urge you to consult your tax advisor regarding this issue if there are questions about what happens after age 121. Taxation of Life Insurance The information contained in this illustration is based on certain tax and legal assumptions. We suggest that you seek professional counsel regarding the interpretation of current tax laws and accounting practices as they relate to your actual situation. The Technical and Miscellaneous Revenue Act (TAMRA) of 1988 classifies some policies as Modified Endowment Contracts The initial annual 7-pay premium for this policy is $5, Based on our interpretation of TAMRA, this policy as illustrated would not be considered a Modified Endowment Contract (MEC). Employer-owned Life Insurance. Where the owner of the policy is the employer of the life insured, Section 101(j) of the Internal Revenue Code specifies a number of requirements that must be satisfied in order for life insurance death benefits to be excluded from income taxation. The life insureds must be the employer s directors and "highly compensated" employees (as is defined by law). If the life insured is not a director or highly compensated employee then the policy's death benefit must be paid out to the life insured (or to the life insured's designated beneficiary) or used to redeem an equity interest in the employer. Before the issuance of the policy, the insured must (1) be notified in writing that the employer/policy owner intends to insure the employee's life and the maximum face amount for which the employee could be insured; (2) give his/her written consent to being insured under the policy and agree that such coverage may continue after the life insured terminates employment; and (3) be informed in writing that the employer/policy owner will be a beneficiary of any proceeds payable upon the death of the life insured. Finally, the employer/policy owner is required to keep records and make an annual report concerning its employer-owned life insurance policies. Taxpayers should seek the counsel of qualified tax advisors to determine the applicability of IRC Section 101(j) or other provisions of federal tax law and/or compliance with the requirements of any such law or regulation. Other Considerations This is an illustration only. An illustration is not intended to predict actual performance. Unless otherwise stated, amounts credited and other Page 3 of 25

5 A Flexible Universal Life Insurance Valuable Information About Your Life Insurance Illustration (cont'd) values set forth in the illustration are not guaranteed. This illustration assumes that the currently illustrated nonguaranteed elements will continue unchanged for all years shown. This is not likely to occur, and the actual results may be more or less favorable. Future credits and deductions can vary at the company's discretion depending upon factors such as death claims, investment earnings and expenses, as well as policy owner actions such as the timing and amount of premium payments, policy lapse and reinstatement, loans and withdrawals, and contractual changes. CASL, CLTC Option 1; Cash Accumulation Test To ensure that your policy continues to meet your objectives, we suggest that in addition to reviewing annual statements, you periodically request in force illustrations. In force illustrations will provide an updated projection of policy performance. Protection UL is issued by John Hancock Life Insurance Company (U.S.A.) of Boston, MA John Hancock Life Insurance Company (U.S.A.) consistently receives high financial strength ratings from independent rating agencies. For more information, please visit our website at For more than a century, John Hancock has offered security and high quality products to its customers. The company's experience and resources allow it to provide first class financial solutions to customers in every market in which it operates. Page 4 of 25

6 A Flexible Universal Life Insurance Basic Illustration Summary Coverage Summary Initial Initial Coverage Description Amount Face Amount - Level for all years $250,000 $1, Summary Option 1; Cash Accumulation Test State North Carolina Option 1 From 1 Thru 96 Definition of Life Insurance CVAT Payment Mode Annual Charges Current Assumed Interest Rate 5.05% From 1 Thru 96 Loan Interest Rate 4.25% From 1 Thru 96 Owner Tax Bracket 35.00% From 1 Thru 96 Initial 7-Pay Target $5, $ Minimum Initial $38.04 Protection Period Based on Illustrated Assumptions 37 s Interest Adjusted Indexes on Insured at 5% Payment Cost Guaranteed Current Non-guaranteed Element Interest Adjusted Indexes These indexes provide a means for evaluating the comparative cost of the policy under stated assumptions. They can be useful in comparing similar plans of insurance, a lower index being better than a higher one. These indexes reflect the time value of money. Indexes are approximate because they involve assumptions, including the rate of interest used. PUL13 Page 5 of 25

7 A Flexible Universal Life Insurance Numeric Summary Option 1; Cash Accumulation Test GUARANTEED ASSUMPTIONS These policy benefits and values are GUARANTEED NON-GUARANTEED ASSUMPTIONS based on the guaranteed interest of SUMMARY YEARS ASSUMPTIONS Midpoint Scale Assumed Scale 2.00% and guaranteed charges. Based on your Planned Outlay, the s Paid in Cash policy would remain in force until policy year 38, month 3*. NON-GUARANTEED ASSUMPTIONS Summary 5 These policy benefits and values are 1,894 2,041 2,193 based on non-guaranteed elements that 250, , ,000 are subject to change by the insurer. Actual results may be more or less Summary 10 favorable. 4,543 5,468 6,475 ASSUMED SCALE: 250, , ,000 benefits and values are based on the initial current interest rate of 5.05% Summary 20 and current charges. Based on your 9,352 13,488 18,541 Planned Outlay, the policy 250, , ,000 would remain in force until age 121*. Summary Age 70 MIDPOINT SCALE: ,512 Assumes the midpoint interest rate ,000 and charges which are halfway between current and guaranteed. Based on your Planned Outlay, the policy would remain in force until policy year 42, month 2*. s are assumed to be paid at the beginning of each modal period. values, including surrender values and death benefits, are illustrated as of the end of the year, unless otherwise noted. * See Continuation at Age 121 on "Valuable Information" page. Representative's Address: Scott D. Sorrell, CLU, ChFC, AIF, RICP, 8816 Six Forks Rd. Suite 301 Raleigh, NC I have received a copy of this illustration and understand that any non-guaranteed elements illustrated are subject to change and could be either higher or lower. The representative has told me they are not guaranteed. I further understand that the guarantees provided by the Protection feature are directly affected by the amount and timing of premiums paid. <ins1si> <ins1dt> Applicant: Date: (Signature) (mm/dd/yyyy) I certify that this illustration has been presented to the applicant and that I have explained that any non-guaranteed elements illustrated are subject to change. I have made no statements that are inconsistent with the illustration. <asi> <adt> Representative: Date: (Signature) (mm/dd/yyyy) Page 6 of 25

8 John Hancock Life Insurance Company (U.S.A.) A Flexible Universal Life Insurance Guaranteed and Nonguaranteed s EOY Age Planned , , , ,160 1, ,000 1, , ,160 1, ,000 1, , ,160 2,208 1, ,000 2,408 1, , ,160 2,774 1, ,000 3,073 2, , ,160 3,212 2, ,000 3,782 2, , ,160 3,664 2, ,000 4,528 3, , ,160 4,126 3, ,000 5,312 4, , ,160 4,591 3, ,000 6,134 5, , ,160 5,063 4, ,000 6,996 6, ,000 Totals: 11,600 End of Guaranteed Assumptions 2.00% Minimum Rate, Maximum Charges Option 1; Cash Accumulation Test End of Non-Guaranteed Assumptions 5.05% Initial Current Rate, Current Charges ,160 5,539 5, ,000 7,940 7, , ,160 6,012 5, ,000 8,928 8, , ,160 6,484 6, ,000 9,961 9, , ,160 6,945 6, ,000 11,041 10, , ,160 7,398 7, ,000 12,168 12, , ,160 7,840 7, ,000 13,342 13, , ,160 8,263 8, ,000 14,565 14, , ,160 8,661 8, ,000 15,838 15, , ,160 9,026 9, ,000 17,164 17, , ,160 9,352 9, ,000 18,541 18, , ,655 8, ,000 18,968 18, , ,886 7, ,000 19,393 19, , ,039 7, ,000 19,813 19, , ,135 6, ,000 20,227 20, , ,167 5, ,000 20,630 20, , ,117 4, ,000 21,023 21, , ,971 2, ,000 21,400 21, , ,702 1, ,000 21,756 21, , ,000 22,087 22, , ,000 22,390 22, ,000 ## Indicates that the policy has lapsed under the illustrated assumption. Additional premium would be required to maintain policy benefits. Page 7 of 25

9 John Hancock Life Insurance Company (U.S.A.) A Flexible Universal Life Insurance Guaranteed and Nonguaranteed s (cont'd) EOY Age Planned ,000 22,653 22, , ,000 22,874 22, , ,000 23,045 23, , ,000 23,156 23, , ,000 23,198 23, , ,000 23,158 23, , ,000 23,023 23, , ## ## ## 22,779 22, , ,410 22, , ,332 22, ,000 End of Guaranteed Assumptions 2.00% Minimum Rate, Maximum Charges Option 1; Cash Accumulation Test End of Non-Guaranteed Assumptions 5.05% Initial Current Rate, Current Charges ,482 23, , ,675 24, , ,911 25, , ,190 27, , ,512 28, , ,875 29, , ,279 31, , ,724 32, , ,211 34, , ,735 35, , ,299 37, , ,893 38, , ,513 40, , ,158 42, , ,824 43, , ,508 45, , ,205 47, , ,909 48, , ,610 50, , ,296 52, ,000 ## Indicates that the policy has lapsed under the illustrated assumption. Additional premium would be required to maintain policy benefits. Page 8 of 25

10 John Hancock Life Insurance Company (U.S.A.) A Flexible Universal Life Insurance Guaranteed and Nonguaranteed s (cont'd) EOY Age Planned ,949 53, , ,562 55, , ,124 57, , ,626 58, , ,054 60, , ,421 61, , ,741 62, , ,030 64, , ,299 65, , ,560 66, ,000 End of Guaranteed Assumptions 2.00% Minimum Rate, Maximum Charges Option 1; Cash Accumulation Test End of Non-Guaranteed Assumptions 5.05% Initial Current Rate, Current Charges ,835 67, , ,179 69, , ,647 70, , ,320 72, , ,325 74, , ,860 76, , ,227 80, , ,900 84, , ,639 91, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,000 ## Indicates that the policy has lapsed under the illustrated assumption. Additional premium would be required to maintain policy benefits. Page 9 of 25

11 John Hancock Life Insurance Company (U.S.A.) A Flexible Universal Life Insurance Guaranteed and Nonguaranteed s (cont'd) EOY Age Planned , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,736 End of Guaranteed Assumptions 2.00% Minimum Rate, Maximum Charges Option 1; Cash Accumulation Test End of Non-Guaranteed Assumptions 5.05% Initial Current Rate, Current Charges ## Indicates that the policy has lapsed under the illustrated assumption. Additional premium would be required to maintain policy benefits. Page 10 of 25

12 A Flexible Universal Life Insurance Illustration Option 1; Cash Accumulation Test EOY Age Planned , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,000 Totals: 11,600 Face Amount Required Additional Total , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,000 Page 11 of 25

13 A Flexible Universal Life Insurance Illustration (cont'd) Option 1; Cash Accumulation Test EOY Age Planned , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,000 Face Amount Required Additional Total , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,000 Page 12 of 25

14 A Flexible Universal Life Insurance Illustration (cont'd) Option 1; Cash Accumulation Test EOY Age Planned , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,000 Face Amount Required Additional Total , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,000 Page 13 of 25

15 A Flexible Universal Life Insurance Illustration (cont'd) Option 1; Cash Accumulation Test EOY Age Planned , , , , , , , , , , , , ,000 6, , , , ,000 23, , , , ,000 41, , , , , , , , , , , ,736 Face Amount Required Additional Total Page 14 of 25

16 A Flexible Universal Life Insurance Annual Account Summary Option 1; Cash Accumulation Test Planned Charge Admin/ Contract Charges Insurance Charges Amount Credited 1 1, , , ,165 1, , , , , , , , , , , , , , , , , , , , , , , ,475 Totals: 11,600 2,088 3,406 1,007 1,896 Charge 11 1, , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,541 4,176 6,811 2,272 8, , , ,001 19, , ,023 19, , ,045 20, , ,066 20, , ,087 21, , ,107 21, , ,126 21, , ,144 22, , ,160 22, ,390 4,176 10,217 5,756 19,339 Page 15 of 25

17 A Flexible Universal Life Insurance Annual Account Summary (cont'd) Option 1; Cash Accumulation Test Planned Charge Admin/ Contract Charges Insurance Charges Amount Credited ,175 22, , ,188 22, , ,198 23, , ,205 23, , ,209 23, , ,209 23, , ,204 23, , ,097 1,194 22, , ,206 1,178 22, , ,327 1,590 22, ,332 4,176 13,622 14,756 31,687 Charge ,452 2,942 23, , ,585 3,119 24, , ,731 3,308 25, , ,891 3,510 27, , ,064 3,726 28, , ,254 3,957 29, , ,459 4,204 31, , ,680 4,466 32, , ,920 4,746 34, , ,184 5,049 35, ,735 4,176 17,028 36,976 70, ,465 5,369 37, , ,799 5,733 38, , ,164 6,125 40, , ,563 6,549 42, , ,000 7,006 43, , ,473 7,498 45, , ,006 8,043 47, , ,610 8,654 48, , ,312 9,354 50, , ,139 10,165 52, ,296 4,176 20,434 91, ,213 Page 16 of 25

18 A Flexible Universal Life Insurance Annual Account Summary (cont'd) Option 1; Cash Accumulation Test Planned Charge Admin/ Contract Charges Insurance Charges Amount Credited ,120 11,114 53, , ,226 12,179 55, , ,472 13,375 57, , ,879 14,722 58, , ,526 16,295 60, , ,192 17,900 61, , ,875 19,535 62, , ,577 21,206 64, , ,402 23,011 65, , ,390 24,992 66, ,560 4,176 23, , ,542 Charge ,556 27,172 67, , ,706 29,390 69, , ,909 31,718 70, , ,252 34,266 72, , ,708 37,054 74, , ,056 39,931 76, , ,125 42,833 80, , ,877 45,891 84, , ,105 49,185 91, , ,476 52, , ,884 4,176 27, , , ,454 50, , , ,624 50, , , ,213 50, , , ,375 50, , , ,079 49, , , ,140 48, , , ,831 45, , , ,214 42, , , ,257 39, , , ,924 35, , ,428 4,176 30, ,048 1,172,102 Page 17 of 25

19 A Flexible Universal Life Insurance Annual Account Summary (cont'd) Option 1; Cash Accumulation Test Planned Charge Admin/ Contract Charges Insurance Charges Amount Credited ,178 31, , , ,973 27, , , ,261 22, , , ,149 18, , , ,455 19, , , ,725 21, , , , , , , , , , , , , , ,736 4,176 32,694 1,008,788 1,377,194 Charge Page 18 of 25

20 A Flexible Universal Life Insurance Internal Rate of Return Illustration EOY Age Outlay , % 250, % , % 250, % , % 250, % ,160 1, % 250, % ,160 2, % 250, % ,160 2, % 250, % ,160 3, % 250, % ,160 4, % 250, % ,160 5, % 250, % ,160 6, % 250, % Totals: 11, Internal Rate Of Return Option 1; Cash Accumulation Test Internal Rate Of Return ,160 7, % 250, % ,160 8, % 250, % ,160 9, % 250, % ,160 10, % 250, % ,160 12, % 250, % ,160 13, % 250, % ,160 14, % 250, % ,160 15, % 250, % ,160 17, % 250, % ,160 18, % 250, % The IRR on cash value is equivalent to an interest rate at which an amount equal to the illustrated premiums could have been invested outside the policy to arrive at the net surrender value of the policy. The IRR on death benefit is equivalent to an interest rate at which an amount equal to the illustrated premiums could have been invested outside the policy to arrive at the net death benefit of the policy. Page 19 of 25

21 A Flexible Universal Life Insurance Internal Rate of Return Illustration (cont'd) EOY Age Outlay , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % Internal Rate Of Return Option 1; Cash Accumulation Test Internal Rate Of Return , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % The IRR on cash value is equivalent to an interest rate at which an amount equal to the illustrated premiums could have been invested outside the policy to arrive at the net surrender value of the policy. The IRR on death benefit is equivalent to an interest rate at which an amount equal to the illustrated premiums could have been invested outside the policy to arrive at the net death benefit of the policy. Page 20 of 25

22 A Flexible Universal Life Insurance Internal Rate of Return Illustration (cont'd) EOY Age Outlay , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % Internal Rate Of Return Option 1; Cash Accumulation Test Internal Rate Of Return , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % The IRR on cash value is equivalent to an interest rate at which an amount equal to the illustrated premiums could have been invested outside the policy to arrive at the net surrender value of the policy. The IRR on death benefit is equivalent to an interest rate at which an amount equal to the illustrated premiums could have been invested outside the policy to arrive at the net death benefit of the policy. Page 21 of 25

23 A Flexible Universal Life Insurance Internal Rate of Return Illustration (cont'd) EOY Age Outlay , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % Internal Rate Of Return Option 1; Cash Accumulation Test Internal Rate Of Return , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % The IRR on cash value is equivalent to an interest rate at which an amount equal to the illustrated premiums could have been invested outside the policy to arrive at the net surrender value of the policy. The IRR on death benefit is equivalent to an interest rate at which an amount equal to the illustrated premiums could have been invested outside the policy to arrive at the net death benefit of the policy. Page 22 of 25

24 A Flexible Universal Life Insurance Internal Rate of Return Illustration (cont'd) EOY Age Outlay , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % , % 250, % Internal Rate Of Return Option 1; Cash Accumulation Test Internal Rate Of Return , % 250, % , % 250, % , % 250, % , % 256, % , % 273, % , % 291, % , % 305, % , % 321, % , % 337, % , % 354, % The IRR on cash value is equivalent to an interest rate at which an amount equal to the illustrated premiums could have been invested outside the policy to arrive at the net surrender value of the policy. The IRR on death benefit is equivalent to an interest rate at which an amount equal to the illustrated premiums could have been invested outside the policy to arrive at the net death benefit of the policy. Page 23 of 25

25 A Flexible Universal Life Insurance Glossary of Terms Contract Charge Contract Charge is an additional $ per $1,000 of Face Amount per policy month. This charge varies by the insured's issue age, gender, risk classification, and the policy duration. Cost Of Insurance Current insurance charges are based on Company experience. The current rates may change, but are guaranteed never to exceed the maximum rates. Maximum rates reflect the 2001 CSO Sex and Smoker Distinct Age Nearest Birthday Ultimate Mortality Table. Option Option 1 provides a level amount of coverage. It will increase only when necessary to maintain the definition of life insurance. Option 2 provides coverage equal to the Face Amount plus the plus any amount necessary to maintain the definition of life insurance. Face Amount The Face Amount is the coverage provided by the base policy. Any decreases to the Face Amount after the first policy year must fall within policy minimums. Monthly Administrative Charge A monthly Administrative Charge of $15.00 will be assessed in all years, current and guaranteed. The illustrated is the Face Amount plus any Required Additional. This is the value that is payable upon the death of the insured as stated on the front page of the policy. The actual amount payable may be decreased by loans or increased by additional insurance benefits. s are illustrated as of the end of the year. reflects the total loan plus any loan interest due. Income Income reflects any illustrated withdrawal, policy CASL, CLTC Option 1; Cash Accumulation Test loan and/or loan interest due. The is the less Charge(s), and is illustrated as of end of the year. This amount is shown net of withdrawals and total loans plus interest due. During the Charge period, there is a Charge assessed if all or part of the Face Amount is reduced. If the policy terminates for any reason, the amount of any outstanding loan (that was not previously considered income) could result in a considerable tax. Under certain situations involving large amounts of outstanding loans, you might find yourself having to choose between high premium requirements to keep your policy from lapsing and a significant tax burden if you allow the lapse to occur. Please consult your tax advisor for further information. Persistency Credit Beginning in 6, a Persistency Credit is added to your on each monthly Processing Date. The Persistency Credit formula is guaranteed by the contract not to change with the minimum Persistency Credit being 0.025% of the per month. The amount of the Persistency Credit above the minimum is determined based on policy owner actions, including the timing and amount of premium payments, loans, withdrawals, lapse and reinstatement; as well as the rates of interest applied to the policy; and the Cost of Insurance rates. The manner in which these changes are reflected in the Persistency Credit is specified in your policy. You can see a projection of the effect that different credited interest rates or policy owner actions would have on the Persistency Credit by requesting illustrations showing different scenarios. Planned Outlay The Planned Outlay is the amount which the policyholder plans to pay. This illustration assumes that planned premiums are paid at the beginning of each modal period indicated. Additional premiums may be paid while the policy is in force, subject to our minimum Page 24 of 25

26 A Flexible Universal Life Insurance Glossary of Terms (cont'd) and maximum limits. CASL, CLTC Option 1; Cash Accumulation Test When premiums are paid, the balance, after premium charges are deducted, goes into the. The is credited daily with a guaranteed interest rate of 2.00% or the current rate, whichever is greater. Also, once each month, administrative and insurance charges are deducted. Required Additional The death benefit will automatically be increased if necessary to maintain the minimum amount of insurance needed to comply with current federal tax law (Section 7702 of the Internal Revenue Code). This will ensure that your policy maintains the favorable tax treatment associated with being a life insurance policy. Risk Class Classifications represent groups of people with similar risk characteristics and help to determine the cost of insurance. Final risk classification for a proposed insured is determined upon completion of the underwriting process, and may vary from what is shown on this illustration. If so, you will receive a Revised Basic Illustration prior to or upon delivery of your insurance contract. Page 25 of 25