Premium Deposit Fund Rider

Transcription

1 Allianz Life Insurance Company of North America Premium Deposit Fund Rider Life insurance with one lump-sum payment and multiple advantages M-5480 Page of 8

2 Understanding the advantages of life insurance Life insurance can offer multiple TAX ADVANTAGES. Financial worries aren t something you want to leave your family. With an Allianz fixed index universal life (FIUL) insurance policy, you receive a level of financial certainty in the form of death benefit protection for your loved ones and an opportunity to build resources for your future needs. The death benefit protection can address immediate needs in the event the unexpected occurs. This can include income replacement, a college funding strategy, paying down your mortgage and other debts, estate tax coverage, final expenses, business succession, and more. You can also benefit from the several tax advantages life insurance provides, including: An income-tax-free death benefit that passes to your beneficiaries Tax-deferred cash value accumulation potential Income-tax-free access to any available cash value through policy loans and withdrawals that can be used for whatever you need (e.g., to supplement your retirement income, help fund a college education, pay for a wedding, emergencies, etc.) By obtaining protection for your life today, you re taking steps to help decrease your and your loved ones financial vulnerability in the future. This material must be preceded or accompanied by the appropriate FIUL product consumer brochure. Policy loans and withdrawals will reduce the available cash value and death benefits, and may cause the policy to lapse or affect guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. Policy loans are not usually subject to income tax unless the policy is classified as a modified endowment contract (MEC) under IRC Section 7702A. However, withdrawals or partial surrenders from a non-mec policy are subject to income tax to the extent that the amount distributed exceeds the owner s cost basis in the policy. Loans, withdrawals, or partial surrenders from a MEC policy are subject to income tax to the extent of any gains in the policy, and if the payment occurs prior to age 59½, a 0% federal additional tax may apply. Tax laws are subject to change. You should consult a tax professional. Page 2 of 8

3 The Premium Deposit Fund Rider The PDF Rider OFFERS SIMPLICITY in the form of a single lump-sum payment. Available with Allianz FIUL insurance policies, the optional Premium Deposit Fund (PDF) Rider combines all of the advantages of life insurance with the simplicity of a single lump-sum payment. By submitting a lumpsum amount to the PDF, we re able to automatically transfer your annual premium payments into your life insurance policy for you. There are several benefits to the PDF: It s predictable: You can determine the life insurance premium amount and the number of years you ll need to pay to keep the policy in force and support your overall financial strategy. It helps maintain the life insurance tax advantages: By combining the PDF Rider with a life insurance policy, you get all the tax advantages of life insurance with the simplicity of a single lump-sum payment. It s simple: Life insurance premiums are automatically transferred from the PDF into your life insurance policy, giving you a disciplined premium payment approach and the reassurance it can provide. Your out-of-pocket premium is discounted: You ll receive a Premium Discount Rate as the premium is transferred from the PDF into your life insurance policy helping to stretch your dollars further. 2 Additional premium payments may be required to keep the life insurance policy in force if the premium discount rate changes after issue. 2 The Premium Discount Rate is guaranteed on an annual basis and will never be less than 0.25%. Discount does not apply to first-year premium. Page 3 of 8

4 Premium Deposit Fund Rider How the Premium Deposit Fund Rider works ANNUAL LIFE INSURANCE PLANNED PREMIUM YEAR YEAR 2 YEAR 3 YEAR 4 YEAR 5 MAKE A LUMP-SUM PAYMENT PDF LIFE INSURANCE POLICY Discounted premium Discounted Premium Credit = Annual planned premium This hypothetical example is for illustrative purposes only and assumes five planned premium payments from the PDF. Step : You make a lump-sum payment into the PDF. Step 2: Your first annual planned premium is deducted from this amount and transferred to your life insurance policy. The remaining amount is your initial PDF value. Step 3: Each policy year, for the number of years you select for the Premium Deposit Fund period, your annual planned premium will be transferred from the PDF into your life insurance policy. 2 Step 4: Every policy anniversary, the amount transferred from the PDF to pay the annual planned premium will have a Premium Discount Rate applied creating the Discounted Premium Credit. 3 With this kind of opportunity, the Premium Deposit Fund s ADVANTAGE IS EVIDENT. The final premium paid into the policy may be less than the annual premium if the Premium Discount Rate decreases. 2 Minimum number of planned premium transfers is three, and the maximum number of premium transfers is Discounted Premium Credit does not apply to first-year premium. Page 4 of 8

5 How the Discounted Premium Credit works The Discounted Premium Credit compounds over time. As the total calculated Discounted Premium Credit in this example shows below, that can end up to be a substantial amount. Premium Discount Rate Annual planned premium Discounted premium Discounted Premium Credit 2 PDF value $82,497 YEAR YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 $7,59 $0 $343 $65,338 $6,823 $680 $48,55 $6,493 $,00 $32,022 $6,70 $,333 $5,853 $5,853 $,650 $0 LUMP-SUM PAYMENT = $00,000 Total Discounted PREMIUM CREDIT = $5,05 Assumptions: $00,000 lump sum into the PDF Annual life insurance planned premium of Six planned annual premium payment transfers from the PDF Premium Discount Rate does not change during the PDF period. This hypothetical example is provided for illustrative purposes only. Hypothetical PDF example When we issue your life insurance policy, two things occur. First, you submit a lump-sum amount to the PDF. In our example, that lump sum is $00,000 and is intended to pay six annual planned premiums. And second, your first annual planned premium transfer is made to your life insurance policy in this case,. 2 It s important to note that there is no Discounted Premium Credit on your first annual planned premium transfer because no time has elapsed yet. This is the only time while the PDF is in effect that you won t receive the credit. On the first anniversary of your policy (year 2), your annual planned premium is still, but only $7,59 of that is withdrawn from your PDF. That s because you receive a Premium Discount Rate on your premium of, which results in a $343 out-of-pocket discount for you. $7,59 Discounted premium $343 Discounted = Premium Credit 2 Annual planned premium This discounted premium is determined by dividing the annual planned premium amount of by the sum of one plus the Premium Discount Rate, resulting in.02. The annual planned premium amount is divided by.02 to reflect the discount being applied at the beginning of the year, instead of a credit at the end of the year. Your Discounted Premium Credit is equal to the annual planned premium amount less the discounted premium. It compounds every year because it is calculated from the date your policy is issued to the date your annual planned premium is transferred to your life insurance policy. On the second policy anniversary (year 3), your annual planned premium is still, but the Premium Discount Rate is compounded for two years /.02 2, creating a discounted premium of $6,823 and Discounted Premium Credit of $680. After the second policy anniversary, this process is repeated each year on the policy anniversary for the planned duration of your PDF. (For instance, the discounted premium formula for year 4 would be /.02 3, year 5 would be /.02 4, etc.) In our example, we show the Premium Discount Rate remaining constant from year to year, although it is subject to change. Please refer each year to your annual report for the Premium Discount Rate. Any change in the Premium Discount Rate will also change the formula used to calculate the discounted premium, respectively. As you can see, $00,000 would have been paid into the PDF, and because of the Discounted Premium Credit, $05,05 would have gone into the life insurance policy. The Premium Discount Rate will be declared on an annual basis and guaranteed for one year. The minimum Premium Discount Rate is 0.25%. 2 Discounted Premium Credit does not apply to first-year premium. Note: When we solve for either the Annual Planned Premium or deposit amount, we assume the Premium Discount Rate will not change over the PDF period. The rate may increase or decrease, and will affect the balance of the PDF. 3 Page 5 of 8

6 Premium Deposit Fund Rider Premium Deposit Fund (PDF) Rider key information Products available Cost Minimum lumpsum amount Planned premium payment transfers Premium Discount Rate Discounted Premium Credit Policyholder Allianz Life Pro Fixed Index Universal Life Insurance Policy Allianz Life Pro Survivor SM Fixed Index Universal Life Insurance Policy There is no fee charged for having a PDF. $0,000 plus the current annual planned premium Minimum of three premium payment transfers with a maximum of 0 premium payment transfers The Premium Discount Rate is only earned when premium is paid into the policy. The Premium Discount Rate will be declared on an annual basis and guaranteed for one year. The minimum Premium Discount Rate is guaranteed at 0.25%. The Discounted Premium Credit being transferred to the policy is considered interest paid to the policyholder and will generate a 099-INT for the policyholder. (Please consult with your tax advisor.) The policyholder may request a full withdrawal of the PDF balance while the life insurance policy is in force. The current balance of the PDF will be paid to the policyholder. Each life insurance policy can only have one PDF. Contact your financial professional to learn more about the Premium Deposit Fund Rider and how it can offer you all the advantages of an Allianz FIUL policy with the simplicity of a single lump-sum payment. 4 Page 6 of 8

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8 True to our promises so you can be true to yours. A leading provider of annuities and life insurance, Allianz Life Insurance Company of North America (Allianz) bases each decision on a philosophy of being true: True to our strength as an important part of a leading global financial organization. True to our passion for making wise investment decisions. And true to the people we serve, each and every day. Through a line of innovative products and a network of trusted financial professionals, and with over 2.6 million contracts issued, Allianz helps people as they seek to achieve their financial and retirement goals. Founded in 896, Allianz is proud to play a vital role in the success of our global parent, Allianz SE, one of the world s largest financial services companies. While we pride ourselves on our financial strength, we re made of much more than our balance sheet. We believe in making a difference with our clients by being true to our commitments and keeping our promises. People rely on Allianz today and count on us for tomorrow when they need us most. Guarantees are backed solely by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America. Product and feature availability may vary by state. Products are issued by: Allianz Life Insurance Company of North America PO Box Minneapolis, MN P54350 P6843 (R-2/205) Page 8 of 8