Marketing Guide Dual Benefit Universal Life UL7

Transcription

1 Marketing Guide Dual Benefit Universal Life UL7 F8208, Rev. 3-11

2 Table of Contents National Mutual Benefit s Dual Benefit Universal Life Insurance Policy... 3 Target Markets... 4 Dual Income Protection... 4 NMB s Bi-Weekly Benefit Plan... 5 Pension Maximization... 5 Estate Planning... 6 Mature Market... 6 Small Business Market... 6 Farm Market... 6 Product Highlights... 7 Ideal Solution... 7 Issue Ages... 7 Policy Minimum Face Amount... 7 Premium Classes... 7 Policy Fee... 7 Premiums... 7 Loans and Withdrawals... 8 Surrender Charges... 8 Survivor Purchase Option at First Death... 8 Guaranteed Coverage Monthly Premium Test... 9 Five Year Guaranteed Coverage... 9 Age and Selection Classes Rollover to Dual Benefit FTD Simultaneous Death Benefit Survivor Purchase Option Policy Changes Increase the Face Amount Decrease the Face Amount Change the Death Benefit Option Policy Split Product Riders Accidental Death Benefit Children s Insurance Benefit Cost of Living Rider Individual Term Insurance Benefit Joint Term Insurance Benefit Living Benefit (Accelerated Benefit Rider) Waiver of Monthly Deduction/Cost of Insurance Benefit Waiver of Premium Benefit Page 2 of 16

3 Introducing National Mutual Benefit s Dual Benefit Universal Life Insurance Policy Set yourself apart from your competitors with NMB s Dual Benefit First-To-Die Universal Life Policy. This product is an effective financial planning tool for virtually every market: It helps fund business continuation and key-person needs in the business market. In the personal market, it provides money for estate liquidity or survivor income needs. In addition, you will be able to use our Dual Benefit policy for mortgage protection and pension maximization. With one policy insuring two lives, NMB s Dual Benefit provides a cost-efficient solution to fulfilling the needs of your clients. Additional benefits of having just one policy rather than multiple policies are: Ease of understanding for the clients Less paperwork for the representatives Reduced administrative costs, front loads, and surrender charges associated with purchasing multiple policies. NMB s Dual Benefit First-To-Die offers the traditional tax advantages of life insurance with the tax-deferred accumulation of cash values. Since NMB s Dual Benefit is a Universal Life policy, it can provide versatility and flexibility by using loan or withdrawal privileges. As family and/or business needs grow, the policy can grow along with the changing needs. The concept of joint life policies is not a new one. What is new is the competitive and creative offerings found in this universal life contract. Only one face amount is paid out on NMB s Dual Benefit policy. Nevertheless, when the needs of the client are based on the first death, it provides a cost-effective alternative to selling two individual policies. Page 3 of 16

4 Target Markets Dual Income Protection Agents today must consider Dual Benefit policies when doing financial needs analysis for couples. This is perhaps the most common application for joint first-to-die products in today s market. The future incomes of both wage earners need to be protected to enable the family s standard of living to remain the same when one spouse dies. The Dual Benefit policy achieves these goals with one policy and with significant savings. Dual income families are no longer the exception in American society...they are the rule. These statistics are not surprising, given the rising costs of: Home mortgages (or rent) Family s food and clothing Automobile/transportation costs Federal and State taxes Medical expenses Child care School tuition Often, basic needs use up virtually all of the family s dual income. In addition, many families try to set aside funds for: Future college costs New or larger home Retirement Vacation or recreation New vehicle Home improvement Most two income families are substantially under-insured against the loss of either spouse s life. What would happen to the commitments that your clients have made if either wage earner were to die? Could they realistically expect to maintain: Their present lifestyle? Their present home? Their children s education plans? Their saving plans for retirement? Now there is a new, economical response to this very significant threat with NMB s Dual Benefit Life First-To-Die Universal Life policy. Page 4 of 16

5 NMB s Bi-Weekly Benefit Plan This program can be a valuable niche market for you to work in. Many Americans have monthly mortgage payments and many of these same Americans may have a need for adequate life insurance. The Bi-Weekly Benefit Plan is a program that can help with both of these needs. Most of the time this program is sold to families with a mortgage. But it also works well for couples without children, two people (friends or family) that own a home together or even two business partners. In addition, this program works well for a single person. Basically, any person that has a long term debt obligation would benefit from this program. Because the bi-weekly payment structure is combined with a universal life policy, members should take advantage of this program. The potential cash value and death benefit of a universal life policy will be available for a variety of needs before and/or after they die. When meeting with a potential Bi-Weekly Benefit Plan member, be sure to highlight the program s benefits. Minimizes the number of bills paid by combining mortgage payment and life insurance payment. Payments coincide with a bi-weekly pay schedule for convenient budgeting. Works with any mortgage loan. No refinancing, re-qualifying, credit checks or closing costs are necessary. Provides the opportunity to accumulate cash value in a life insurance policy. Cash value can be used for many purposes, including paying the mortgage faster. Protects the financial security of their loved ones with a life insurance policy. (The beneficiary will receive an income tax-free benefit in the event of death.) Pension Maximization This is another excellent market for NMB s Dual Benefit FTD policy. When someone retires, he or she has two retirement income options: life-only or life with survivor options. The life-only option produces a much greater income to the retiree than the life with survivor option, but no payments continue to the spouse upon the retiree s death. Pension Maximization is achieved by selecting the life-only option and using some earned income to purchase a Dual Benefit FTD policy with a death benefit large enough to provide the same retirement income to the spouse that the life with survivor s option would have paid. By taking this approach, the couple gets the best of both worlds - higher retirement income while both are living and, the same income at the retiree s death had the survivor option been elected at retirement. Using NMB s Dual Benefit FTD policy for Pension Maximization when only one person of a couple has a pension plan is still providing greater value than purchasing a single life plan. It provides a death benefit to the insured if the spouse were to die first, and provides the same survivor income to the spouse, as a single life plan would have. It now creates a greater benefit for both the insured and surviving spouse. Page 5 of 16

6 Estate Planning NMB s Dual Benefit FTD policy can be used to cover any estate taxes due at the first death. If there are not any estate taxes due until the second death, our FTD policy enables the survivor to set up an irrevocable trust with the death benefit proceeds, and live off the income from the trust while paying future estate tax liabilities at the second death from the irrevocable trust account. Many financial planners have used a second-to-die policy for estate planning, forgetting that there are expenses associated with the first death in a couple. Expenses could include funeral costs, probate costs, debt repayment, state taxes, attorney and executor fees, and accounting and appraisal fees to name a few. To provide for these inevitable costs (which can add up to 13-15% of the gross estate) our joint FTD policy is the easy solution. (The client should be sure to consult with an attorney for any advice on irrevocable trusts). Mature Market NMB s Dual Benefit FTD policy can provide Social Security income protection. Social Security income for a couple is reduced by one-third to one-half when the first spouse dies. The reduction in Social Security retirement benefits is a result of the Social Security law itself and affects ALL retired couples. Many couples face a loss of pension income when the first spouse dies. NMB s First-To-Die policy offers an ideal way to replace pension and Social Security income upon the death of the first spouse. For many mature adults, living independently after a spouse dies will mean being able to have additional funds available to pay for special needs, such as meal delivery, home nursing care, or home maintenance. NMB s Dual Benefit FTD policy can guarantee the surviving spouse the financial resources to live independently. Small Business Market NMB s Dual Benefit FTD policy solves most problems for small business owners. Our FTD policy is an ideal way to fund business continuation (buy-sell) arrangements and key person protection in the business market. Life insurance is often used to fund stock redemption and cross-purchase buy-sell agreements. The death benefit is paid when they need it, at a savings to the business. One policy will result in lower premium loads, lower expenses and lower surrender changes, thus, leaving more cash available for the business to continue its operation. Farm Market NMB s Dual Benefit FTD policy is useful when a child wants to buy into the family farming operation. Usually it is cost prohibitive for the child to generate the necessary cash to buy into the operation and the parents cannot give it to him or her because of other children in the family. NMB s Dual Benefit FTD policy will make cash available to help the actively involved child purchase some of the farming operation when the first insured parent dies. After that, he or she can become more of an active partner with the surviving parent. The proceeds from our Dual Benefit policy could be used to provide needed cash for the farm operation, to buy out inactive family members, or to provide additional income for the surviving parent. Page 6 of 16

7 Product Highlights Ideal Solution NMB s First-To-Die Dual Benefit UL (UL7) is the ideal product for two income families or business partners who have a shared need for a single death benefit. Examples include, a home mortgage, income replacement or business debt. First-To-Die UL avoids the cost of writing two separate policies. Dual Benefit UL pays one death benefit on the life of the first insured to die. Issue Ages: 20-80* Policy premium rates and values are based on the Joint Equal Issue Age of the two insureds. *Actual ages of the two insureds must be First-To-Die UL policies are issued as follows: Option A Level Death Benefit or Option B Increasing Death Benefit. For amounts above $500,000, submit applications on a COD (cash on delivery) basis. Policy Minimum Face Amount: $50,000 Premium Classes Tobacco Non-Tobacco Policy Fee: $48 Premiums Premium rates and values are based on the Joint Equal Issue Age of the two insureds Like the UL, there are three kinds of premiums that are important with DuaLife policies. 1. Target premium is the premium that an agent will receive full first year commissions on. Any premiums above target will be considered excess premium and therefore receive a lower commission percentage. 2. The minimum premium is the lowest premium that needs to be paid into the policy for each of the first five contract years. At least five times the minimum premium is required to have been paid into the policy by the fifth policy anniversary. 3. The planned premium is simply the premium amount the insured plans on paying into the contract. Policyowners have flexibility with premium payments. They can overfund the policy (pay more than the target premium), subject to guideline limits or they can reduce or even skip payments at their option as long as they have made the minimum premium payment. It is important that the insured be aware of the affect on the policy should they alter premiums. They should monitor their policy s performance (with your help) through a review of annual statements. Page 7 of 16

8 Loans and Withdrawals Cash can be accessed by the policyowner in two ways. Withdrawals, which reduce the cash value and the death benefit by the amount withdrawn, and loans, which are subject to an 8% interest rate. Withdrawals cannot be paid back. Loans can and should be paid back. Surrender Charges Part of the design of the Dual Benefit UL product is the inclusion of a surrender period and surrender charges. The First-To-Die UL has a 15 year uniformly decreasing surrender charge period. Survivor Purchase Option at First Death Within 60 days of the first death, the surviving insured, if age 70 or less, can convert this policy into a new permanent life policy without evidence of insurability. Premiums will be based on the attained age of the surviving insured. Page 8 of 16

9 Guaranteed Coverage Monthly Premium Test This policy provides for a 5-year Guaranteed Coverage Monthly Premium test. The Guaranteed Coverage Monthly Premium test assures that the policy will remain in force for at least 5 years, regardless of the level of the surrender value. The Guaranteed Coverage Monthly Premium is based upon the face amount of the policy and varies by joint selection class and joint equal age at issue. The monthly premium is one-twelfth of the annual premium. Under the Guaranteed Coverage Monthly Premium test, the policy is guaranteed to stay in force during the first 5 policy years, even if the surrender value is not sufficient to cover the next monthly deduction and monthly cost of insurance, provided that the sum of the premiums paid to date, less any withdrawals and partial surrender charges, and less any indebtedness, equals or exceeds the Guaranteed Coverage Monthly Premium times the number of months from the policy issue date through the current month. Five Year Guaranteed Coverage The total 5 year Guaranteed Coverage Monthly Premium for the policy and all attached riders is the monthly amount needed to ensure this policy and all riders stay in force during the first five policy years. Five year Guaranteed Monthly Premiums are also shown separately for the policy and each rider. We guarantee this policy and all attached riders will stay in force during the first five policy years provided that: the sum of the premiums paid to date, less any indebtness, and less any withdrawals and partial surrender charges; equals or exceeds the accumulated 5 year Guaranteed Coverage Monthly Premium. On the date of issue the accumulated 5 year Guaranteed Coverage Monthly Premium is the total 5 year Guaranteed Coverage Monthly Premium as shown in the policy. On each subsequent policy monthly date the accumulated 5 year Guaranteed Coverage Monthly Premium is increased by the total 5 year Guaranteed Coverage Monthly Premium in effect for that policy month as shown in the policy. Page 9 of 16

10 Age and Selection Classes The minimum issue age for either insured is 20, and the maximum issue age for either insured is 80. All policy rates and values are based upon the joint equal age of the two insureds. This is calculated by first determining the issue age of each insured on an age last birthday basis. Then the joint equal age at issue is calculated by performing the following steps: 1. Determine the difference between the individual issue ages (oldest - youngest). This is defined as the Actual Age Difference (AAD). 2. Determine the joint equal age at issue by adding an amount to the younger issue age, as determined from the following table: Actual Age Difference (AAD) 0-1 years 2-3 years 4-5 years 6-8 years 9-12 years years years years Addition Amount (AAD) (AAD)-1 (AAD)-2 (AAD)-3 (AAD)-4 (AAD)-5 (AAD)-6 (AAD)-7 Example 1: The joint equal age at issue for a male 45 and female 42 is found as follows: 1. The actual age difference (AAD) is = 3 2. The table says for an actual age difference of 2-3 years, add (AAD)-1 = (3)-1 = 2 to the younger age, therefore the joint equal age at issue is 42+2 = 44 Example 2: The joint equal age at issue for a male 26 and male 62 is found as follows: 1. The actual age difference (AAD) is = The table says for an actual age difference of years, add (AAD)-7 = 36)-7 29 to the younger age, therefore the joint equal issue age is = 55 The joint equal attained age for a given policy year is the joint equal age at issue plus the policy year, less one. Rollover to Dual Benefit FTD 1035 Exchanges are allowed for joint policies under current tax regulations as long as the policy is another joint policy insuring the same people with the same ownership as the new policy. Page 10 of 16

11 Simultaneous Death Benefit The death benefit proceeds are payable upon receipt of proof that the first death occurred while this policy is in force. The policy terminates upon the first death of the two insured s. We will require return of the policy. The death benefit proceeds consist of: the death benefit amount as defined in the Death Benefit Amount provision; less any indebtedness; less any amounts needed in accordance with the Grace Period provision. If both insured s die such that the order may not be determined, the total death benefit proceeds payable under this policy will not exceed the proceeds as defined above. Survivor Purchase Option Within 60 days of the first death, the surviving insured may purchase a single life policy on any permanent life insurance plan offered. No evidence of insurability will be required. The surviving insured must be 70 or under for this option to apply. Such purchase is subject to the following: a. We will require written request and payment of the first premium. Such request should include ownership and beneficiary designations for the new policy. b. The date of issue of the new policy will be the date we receive your written request. c. The face amount of the new policy may not exceed the death benefit amount payable on the first death (excluding any amounts that were payable for only the deceased under an individual rider). d. The premium for the new policy will be based on the surviving insured's age, sex and risk class. Age is determined as the age of the insured on their last birthday on the issue date of the new policy. The risk class will be the risk class of the surviving insured of this policy. e. The incontestability and suicide provisions of the new policy will be measured from the date of issue of the original FTD policy. Policy Changes By written request the policyholder can make the following changes: a. increase the face amount; or b. decrease the face amount; or c. change the death benefit option. The effective date of any change will be the monthly date on, or next following, the date we approve the request. Page 11 of 16

12 Increase the Face Amount You must apply for any increase in face amount on a supplemental application. We will require evidence of insurability. Both insureds must be under age 81. Each increase must be equal to or greater than $10,000. Additional surrender charges will be imposed with each increase in face amount. We will send a supplement showing the increase and the additional surrender charges. Decrease the Face Amount The face amount remaining in effect after a decrease must be such that the death benefit amount is never less than $50,000. The face amount will be decreased in the following order: a. against the most recent increase in the face amount; b. against the next most recent increases; c. against the initial face amount The effective date of any change will be the monthly date on, or next following, the date we approve the request. Change the Death Benefit Option The following changes listed below may be made at any time. Option A Level Death Benefit or Option B Increasing Death Benefit. Option A to Option B This will decrease the face amount by the account value on the effective date of the change. We will not make this change if the death benefit amount after the change would be less than the minimum death benefit amount. Option B to Option A This will increase the face amount by the account value on the effective date of the change. We will send you a supplement showing the change. Page 12 of 16

13 Policy Split This policy may be split into separate, single life insurance policies on the lives of each of the insureds. No evidence of insurability is required. The split must be applied for by written request prior to the first death. Such request should include ownership and beneficiary designation for the new policies. The new policies will be issued on the single life flexible premium adjustable death benefit plan of insurance which at that time is offered by us. The date of issue of each new policy will be the monthly date on or following the date we receive the request to split this policy. An insured who exceeds our maximum issue age for the single life policy will not be eligible for the split. The policies will be issued according to the attained age and sex of the insured on the date of issue of the new policies. The risk class for each insured will be the risk class as designated in this policy. The death benefit amount and account value will be split evenly between the two insureds. Indebtedness, if any, also will be split evenly and will reduce the death benefit amount and account value to be applied to the new policy. If any portion of the account value is not being applied to the new policy a pro-rata surrender charge from this policy will be applied to the portion not being transferred. Surrender charges will be included in the new policies in accordance with the tables for the plan of insurance in effect at that time. The suicide and incontestability provisions of the new policies will be measured from the date of issue of the old policy. Page 13 of 16

14 Product Riders Joint Accidental Death Benefit This rider provides for an additional death benefit in the event of either insured's death occurring as a result of an accident. The rider is issued at the base insureds' actual ages 20 through 60 and terminates on the policy anniversary following the oldest insured's 65th birthday or the first death of the joint insureds, whichever comes first. The amount of accidental death benefit may not exceed the lesser of twice the death benefit amount of the policy or $200,000. Children s Insurance Benefit This rider provides for convertible term insurance coverage on all insured children between 15 days and 18 years of age at the time of issue, or born to or adopted by the insured after the date of application. Coverage continues until each child's age 25. The coverage is issued between insureds actual ages 20 and 55 and terminates at the oldest insured's actual age 65. The amount of coverage must be $5,000 or $10,000. Conversion may be made at each child's age 25, for up to $5,000 for each $1,000 of children's insurance. Cost of Living Rider This provides for an automatic increase in face amount on the first policy anniversary and every year thereafter while the rider is in force without evidence of insurability, between ages 20 and 65. This coverage terminates upon the earliest of a) the 10th policy anniversary; b) the policy anniversary following the oldest insured s 65th birthday; or c) when the total cost of living rider increases equal 50% of the policy face amount on the date of issue. This coverage carries no extra monthly cost of insurance or minimum premium. However, if the owner(s) reject any increase, the rider is terminated. Individual Term Insurance Benefit This rider provides for convertible term insurance coverage on the named insured who must be one of the joint insureds if death occurs prior to the named insured s age 70. The coverage is issued between the named insured's ages 20 and 65 and terminates at the named insured's age 70. The amount of coverage must be at least $10,000 and be for no more than five times the base face amount. The guaranteed and current monthly cost of insurance rates for this coverage are based on the named insured s attained age, sex and risk class. Conversion can be made at any time prior to the named insured s 65th birthday to any plan of permanent life insurance we then offer. Page 14 of 16

15 Joint Term Insurance Benefit This rider provides for convertible term insurance coverage on the joint insureds if death occurs prior to the oldest insured s age 70. The coverage is issued between the insureds actual ages 20 and 65 and terminates at the oldest insured's age 70. The amount of coverage must be at least $10,000 and be for no more than five times the base face amount. The guaranteed and current monthly cost of insurance rates for this coverage are based on the insureds joint equal attained age, sex and risk class. Conversion may be made at any time prior to the oldest insured s age 65. The rider can be converted to a new permanent plan of insurance on the lives of two insured s or individual policies. Living Benefit I & II Rider (Accelerated Benefit Rider) This rider allows for access to advance funds from a life insurance policy. There is no cost for this rider. For members age 59 and under, a $50,000 minimum death benefit is required to be eligible. For members age 60 and older, a $25,000 minimum death benefit is required to be eligible. If exercised, a $250 administration fee is charged, payout is reduced by various factors as stated in the contract, and will continue with a reduced death benefit and lower premiums. LB I - Terminal Illness Option. Up to 60% of death benefit available in determining the lump sum payout amount. Available on most term policies. LB II - Terminal Illness Option and Nursing Home Option. Up to 90% of death benefit available in determining the lump sum payout amount. Available on most currently issued whole life and universal life policies. Waiver of Monthly Deduction/Cost of Insurance Benefit This rider provides for waiver of all monthly cost of insurance and monthly deductions during a specified insured's period of total and permanent disability (if such disability has continued for at least six months). The rider may cover the disability of one insured only, or may cover the disability of either insured. The rider is issued between the named covered insured s age 20 through 55, based on the age(s) of the covered insured(s). The rider monthly cost is a percentage of the monthly cost of insurance and monthly deduction. When one insured is covered, the rates are based on the attained age of the covered insured; when both insureds are covered, the rates are based on the joint equal attained age of the two insureds. The minimum premium is a percentage of the policy commissionable premiums, based however on the named covered insured s age(s) at issue (joint equal issue age when both insureds are covered). For the single life coverage, the rider terminates at (and disability must occur before) age 60. For coverage on both lives, when the oldest insured reaches age 60, the cost of insurance rates are based on the remaining insured's attained age and the single insured rate table. Coverage terminates at the youngest insured's age 60. Page 15 of 16

16 Waiver of Premium Benefit This rider provides for the monthly crediting of a specified premium benefit during a named covered insured s period of total disability as defined by the rider. The rider may cover the disability of one insured only, or may cover the disability of either insured. This coverage is issued between ages 20 and 55, based on the age(s) of the covered insured(s). The monthly cost of insurance rates for this rider are per $10 of monthly disability benefit. When one insured is covered, the rates are based on the attained age of the covered insured; when both insureds are covered, the rates are based on the joint equal attained age of the two insureds. The minimum premium rates for this rider are per $10 of monthly disability benefit based on named covered insured s age(s) at issue (joint equal issue age when both insureds are covered). For the single life coverage, the rider terminates at (and disability must occur before) age 60. For coverage on both lives, when the oldest insured reaches age 60, the cost of insurance rates are based on the remaining insured's attained age and the single insured rate table. Coverage terminates at the youngest insured's age 60. If we are providing benefits due to the disability of the covered insured which began before age 60, we will continue to provide such benefits until such time that the covered insured ceases to qualify for the benefit. Page 16 of 16