Optimize Your Legacy. Legacy Optimizer. Indexed Universal Life Insurance. Consumer Guide

Transcription

1 Legacy Optimizer Indexed Universal Life Insurance Consumer Guide Optimize Your Legacy FOR AGENT USE ONLY. NOT TO BE USED FOR CONSUMER SOLICITATION PURPOSES.

2 What Is Legacy Optimizer? Legacy Optimizer is a simple Indexed Universal Life (IUL) insurance product with just one premium 1. It s designed specifically to optimize a legacy that will transfer to beneficiaries in the most tax-efficient way at the time of death, while maintaining flexibility and liquidity. What kind of legacy will you leave? Taxes? Debt? Healthcare bills? Legacy Optimizer It s plain and simple. The thought of life insurance can be intimidating, but simplicity is inherent to the Legacy Optimizer product. Upon completion of a short application and a telephone interview, you ll know if you are eligible immediately no blood work, no doctor s appointments, no wait, no hassle. 2 The process is built to be quick and painless. A single premium payment guarantees the death benefit 3, so there s no need to worry about missing a payment or policy lapse. 2

3 Optimize your legacy. If you have money that you want to pass on to your heirs, this is a great opportunity for you to consider. The beauty of Legacy Optimizer is that it allows you to use a single premium to purchase the policy that immediately creates a larger inheritance through a guaranteed death benefit3. Death benefits generally pass to your loved ones free from income tax and outside the probate process. 3 3

4 Discover the value. To demonstrate how Legacy Optimizer can maximize your legacy for your beneficiaries, let s look at a hypothetical scenario. Jim, a 65-year-old, non-tobacco user has $100,000 of discretionary money that he would like to pass on to his heirs someday. If he qualified for and purchased North American s Legacy Optimizer life insurance policy, his $100,000 would leverage into a $168,000 death benefit on day one! Alternatively, if he placed his $100,000 in a traditional financial vehicle with a 1.5% interest rate, even after 20 years, his $100,000 would only grow to $125,075. Which amount would you rather leave behind? $168,000 $100,000 Starting Point $125, Years Later Guaranteed Death Benefit ON DAY 1 Discretionary Money Traditional financial vehicle at 1.5% interest* LEGACY OPTIMIZER *Assuming 25% annual income tax 4

5 Plus... your policy could grow! Legacy Optimizer is an Indexed Universal Life (IUL) insurance product. Like other forms of permanent life insurance, with IUL your premium payments may earn interest and grow the cash value of your policy. As the policy s cash value grows, the death benefit in turn can grow beyond the guaranteed amount. What differentiates IUL is the way interest is credited to the policy. In addition to offering a traditional fixed account with a declared interest rate, IUL offers the ability to earn interest that is linked to the annual movement of a stock market index in an indexed account. If the index is higher one year later, an interest rate reflecting that growth rate is credited, subject to a cap or spread. Floor Rate A key benefit to remember is that IUL offers protection in a poorly performing market. With IUL, you don t participate directly in the stock market and the credited interest rate is never less than zero percent, guaranteed. Two Index Crediting Choices S&P 500 Annual Point-to-Point We compare the index value on the last day of the annual period to the index value on the first day of the period. The growth rate of the index, up to a declared cap, becomes the interest crediting rate. If this amount is negative, zero percent will be credited. Any interest credits are credited to the index account and locked in at the end of the period. S&P 500 Annual Point-to-Point with Spread We compare the index value on the last day of the annual period to the index value on the first day of the period. The growth rate of the index minus a declared spread rate becomes the interest crediting rate. If this amount is negative, zero percent is credited. Any interest credits are then credited to the index account and locked in at the end of the period. Annual Reset Legacy Optimizer is designed with an annual reset, meaning that each year s credited interest is locked in on an annual basis and a new starting point is determined. The interest credited cannot be taken away due to negative index performance and it will continue to participate in any potential future growth, giving you the advantage of compounding interest in future years. Premium Bonus We pay a guaranteed premium bonus 5 of 2% each year in policy years five through nine, for a total of 10%. This bonus is based on the amount of your initial premium minus any withdrawals you may have taken (including withdrawal charges and processing fees). This bonus becomes part of the policy s cash value and is credited interest. 5

6 What if I become seriously ill? Legacy Optimizer includes an accelerated death benefit feature for terminal and chronic illness. If you are diagnosed with a qualifying illness, it will give you access to the death benefit to use towards expenses. This may allow more funds than what would be available through the policy s cash value. If you were to become chronically ill, you could accelerate a maximum of 24% 6 of the death benefit at the time of initial election, every 12 months, until the residual death benefit has been reached, typically in four years. The residual death benefit is equal to the greater of $10,000 or 5% of the death benefit at time of initial election. This is to ensure some death benefit remains to help cover final expenses. If you were to become terminally ill, you could elect a one-time acceleration up to 90% of the death benefit on the election date. Keep in mind that with both chronic and terminal illness, the final death benefit will be reduced by the amount of the death benefit accelerated. Since benefits are paid in advance, a discount will be applied to the death benefit accelerated. As a result, the actual amount received will be less than the amount of the death benefit accelerated. 7 These benefits can be used towards home healthcare expenses, nursing care, even home modifications, or in any other way you wish, and they re generally tax-free. If the funds aren t needed, the death benefit is preserved for your beneficiaries. Chronic Illness Minimum: 5% of the death benefit on election date Maximum: 24% of current death benefit on initial election date every 12 months Terminal Illness Minimum: 10% of the death benefit on election date Maximum: 90% of the death benefit on election date 6

7 What if I change my mind? Life insurance is meant to be a long-term commitment, but North American understands that circumstances can change. Perhaps you encounter an emergency and money is needed. That s why Legacy Optimizer provides several options for accessing the policy s potential cash value. Partial withdrawals 4 and policy loans from the policy s cash value are available in policy year one. After the end of the first policy year, you can request up to 10% of the policy s account value each year with no withdrawal charge 8. Starting in policy year five, Legacy Optimizer offers a guaranteed Return of Premium feature allowing you to receive at least all of your initial premium back if you surrender the policy, minus any amounts previously withdrawn (including withdrawal charges and processing fees). 7

8 Talk to your financial professional today to start building your legacy with Legacy Optimizer! 1. Although Legacy Optimizer is filed as a Flexible Premium Universal Life and allows additional premiums, the product is designed for a single premium payment. There are limited benefits to adding premiums after policy issue - for example, the Account Value will increase with additional premium payments, but the guaranteed death benefit and the Return of Premium Value will NOT. Therefore, clients should carefully consider whether additional premiums should be paid. 2. Coverage is subject to health questions and pharmaceutical check. 3. The death benefit guarantee is void upon taking a policy loan. When a loan is repaid with interest, the death benefit guarantee is reinstated. The death benefit guarantee is reduced upon partial withdrawals. 4. Income growth on accumulated cash values is generally taxable only upon withdrawal. Adverse tax consequences may result if withdrawals exceed premiums paid into the policy. Withdrawals or surrenders made during a Surrender Charge period will be subject to surrender charges and may reduce the ultimate death benefit and cash value. Surrender charges vary by issue age, sex, underwriting class and policy year. 5. A guaranteed premium bonus is paid in increments of 2% each year in policy years five through nine for a total of 10%. Bonus applies to the initial premium less any withdrawals and withdrawal charges and processing fees. 6. Subject to minimums and maximums. 7. An administrative fee is required at time of election for the Chronic or Terminal illness benefit. 8. Up to 10% of the account value beginning in policy year two and only one withdrawal is allowed per year. Withdrawals in excess of the 10% will be subject to a withdrawal charge. The primary purpose of life insurance is to provide a death benefit to beneficiaries. Chronically ill is defined as unable to perform at least two of the six Activities of Daily Living (bathing, continence, dressing, eating, toileting and transferring) without substantial assistance from another person. Chronic illness also includes severe cognitive impairment which means the insured requires substantial supervision by another person to protect him or herself from threats to health and safety due to a severe cognitive impairment. In Massachusetts, the Accelerated Death Benefit amount for chronic illness may only be payable for expenses incurred for Qualified Long Term Care Services. Refer to the policy form for details. Texas Residents: Receipt of acceleration-of-life-insurance benefits may affect your, your spouse s or your family s eligibility for public assistance programs such as medical assistance (Medicaid), Aid to Families with Dependent Children (AFDC), supplementary social security income (SSI), and drug assistance programs. You are advised to consult with a qualified tax advisor and with social service agencies concerning how receipt of such a payment will affect your, your spouse s and your family s eligibility for public assistance. Neither North American nor its agents give legal or tax advice. Please consult with and rely on a qualified legal or tax advisor before entering into or paying additional premiums with respect to such arrangements. THE S&P 500 COMPOSITE STOCK PRICE INDEX This index does not include dividends paid by the underlying companies. The S&P 500 is a product of S&P Dow Jones Indices LLC ( SPDJI ), and has been licensed for use by North American Company for Life and Health Insurance (the Company). Standard & Poor s, S&P, and S&P 500 are registered trademarks of Standard & Poor s Financial Services LLC ( S&P ); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC ( Dow Jones ); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by the Company. The Company s Product(s) are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, S&P Dow Jones Indices ). S&P Dow Jones Indices makes no representation or warranty, express or implied, to the owners of the Company s Product(s) or any member of the public regarding the advisability of investing in securities generally or in the Company s Product(s) particularly or the ability of the S&P 500 Indices to track general market performance. S&P Dow Jones Indices only relationship to the Company with respect to the S&P 500 is the licensing of the Index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices or its licensors. The S&P 500 is determined, composed and calculated by S&P Dow Jones Indices without regard to the Company or the Company s Product(s). S&P Dow Jones Indices have no obligation to take the needs of the Company or the owners of the Company s Product(s) into consideration in determining, composing or calculating the S&P 500. S&P Dow Jones Indices is not responsible for and has not participated in the determination of the prices, and amount of the Company s Product(s) or the timing of the issuance or sale of the Company s Product(s) or in the determination or calculation of the equation by which the Company s Product(s) are to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices has no obligation or liability in connection with the administration, marketing or trading of the Company s Product(s). There is no assurance that investment products based on the S&P 500 will accurately track index performance or provide positive investment returns. S&P Dow Jones Indices LLC is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice. Notwithstanding the foregoing, CME Group Inc. and its affiliates may independently issue and/or sponsor financial products unrelated to the Product(s) currently being issued by the Company, but which may be similar to and competitive with the Company s Product(s). In addition, CME Group Inc. and its affiliates may trade financial products which are linked to the performance of the S&P 500. S&P DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE S&P 500 OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY THE COMPANY, OWNERS OF THE PRODUCT(S), OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P MIDCAP and the S&P 500 INDICES OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND THE COMPANY, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES. Indexed Universal Life products are not an investment in the market or in the applicable index and are subject to all policy fees and charges normally associated with most universal life insurance. Legacy Optimizer (policy form series LS180) and Return of Premium Endorsement (form series LS500) are issued by North American Company for Life and Health Insurance, Administrative Office, One Sammons Plaza, Sioux Falls, SD Products, features, riders, endorsements or issue ages may not be available in all jurisdictions. Limitations or restrictions may apply. 525 W Van Buren Chicago IL FOR AGENT USE ONLY. NOT TO BE USED FOR CONSUMER SOLICITATION PURPOSES.